ECON 4830 Chapter Notes - Chapter 2: Game Theory, Good Governance

• School: University of Guelph
• Department: Economics
• Course: ECON 4830
• Professor: Kurt Annen

Document Summary

The role of chi(cid:374)a"s aid kurt annen and stephen knack. Fewer participants in contest for aid lowers equilibrium policy levels: weak alignment of preferences between donor and recipient participating in the contest lowers equilibrium policy levels not only for recipient but for all other recipient participating in contest. Chi(cid:374)a"s e(cid:373)erge(cid:374)(cid:272)e as a do(cid:374)or has u(cid:374)der(cid:373)i(cid:374)ed (cid:373)ultilateral age(cid:374)(cid:272)ies due to their fi(cid:374)a(cid:374)(cid:272)ial flo(cid:449)s to less developed countries. Chi(cid:374)a"s poli(cid:272)y does (cid:374)ot (cid:272)o(cid:374)sider de(cid:373)o(cid:272)ra(cid:272)y, hu(cid:373)a(cid:374) rights or other ele(cid:373)e(cid:374)ts of good governance in its aid allocation decisions: with china in the picture, incentives for recipients to improve their governance is weakened. China supported african countries that were more abundant in natural resources and has poor governance records. Chi(cid:374)a"s aid a(cid:373)ou(cid:374)t has (cid:271)ee(cid:374) o(cid:448)erstated, aid is (cid:374)ot sig(cid:374)ifi(cid:272)a(cid:374)tly li(cid:374)ked to (cid:374)atural resour(cid:272)e e(cid:374)do(cid:449)(cid:373)e(cid:374)ts or with weaker governance. Chi(cid:374)a"s fi(cid:374)a(cid:374)(cid:272)i(cid:374)g has a lo(cid:449)er gra(cid:374)t ele(cid:373)e(cid:374)t a(cid:374)d their loa(cid:374)s (cid:373)ay (cid:271)e good su(cid:271)stitutes for aid.