Flexibility matters: Donors’ choices between companies, NGOs, and local partners in poor governance contexts

Diplôme Thèse Flexibility matters: Donors’ choices between companies, NGOs, and local partners in poor governance contexts eng 2024 2024 author Pfanner Cédric 894329 Département de science politique et relations internationales (SdS) (SPERI) director Dietrich Simone 878687 Service enseignement, recherche, administratif et technique (SdS) (SCSPS) 209 10.13097/archive-ouverte/unige:176506 urn:nbn:ch:unige-1765066 SdS 258 Non-state actors have taken a prominent role in implementing development aid projects. Neoliberal donors, in particular, choose to entrust the implementation of their projects to a diverse range of actors, including companies, international non-governmental organizations (INGOs), and local NGOs. This raises questions about how donors choose between companies and Non-Governmental Organizations (NGOs), as well as between international NGOs and local NGOs. By drawing on the principal-agent theory, the thesis argues that corruption and a weak rule of law are two factors that influence donors’ choices among non-state actors. The thesis argues that donors have a choice between two implementation strategies when delegating project implementation to non-state actors. The first is a contractual approach involving ‘buying’ projects, and the second is a granting approach involving funding implementation partners. The second approach provides more flexibility to the implementation partner, as they can adjust the budget for unforeseen costs, change priorities, or even modify the project’s goal to account for changes on the ground. The thesis argues that in corrupt countries with a weak rule of law, this flexibility is crucial to achieving aid objectives. Donors are aware of the need for flexibility of the implementing partner and are, therefore, more likely to use the granting approach. Donors are reassured of providing flexibility in countries with corruption and a weak rule of law because granting awards mainly go to NGOs. NGOs’ development motives reassure donors that flexibility will be used to improve the project’s outcomes. Inversely, donors are less willing to provide flexibility to companies because they perceive that companies will use flexibility to increase profits. The partnership approach also works better with NGOs because their socially motivated goals lead them to be present in countries with corruption and a weak rule of law, whereas companies tend to enter such environments after winning donor projects. Thus, NGOs can position themselves as partners and collaborate with donors on the design and implementation of projects. Regarding the choice of donors to rely on international or local NGOs for implementation, it argues that donors adopt a de-risking strategy with INGOs. Donors mainly award projects to INGOs and compel them to include local NGOs for implementation. Donors use such a strategy to minimize their exposure to fraud risks because they perceive local NGOs as riskier than INGOs. Thus, in case of fraud, donors can attribute blame to the lack of oversight by INGOs rather than themselves, avoiding the political cost of corrup- tion. I argue that corruption and a weak rule of law exacerbate donors’ perception that local NGOs may commit fraud, intensifying their use of the de-risking strategy. Using USAID as my case study, the thesis tests these hypotheses using interviews, archival research, and statistical methods. The results confirm the first hypothesis. Donors give more flexibility to non-state actors in countries with corruption and a weak rule of law and prefer giving that flexibility to NGOs. Although the results seem to validate the second hypothesis, there is not enough statistical confidence to confirm it. The results demonstrate that local NGOs are becoming more important in aid delivery and that donors’ localization results depend on how much willingness donors put in. USAID For-profit and nonprofit organizations Aid delivery Donor decision-making Local NGOs Bypass Privatization Contracts or grants Localization Beltway Bandits INGOs Foreign aid Navigation by judgement Delegation Project implementation Flexibility in aid projects Corruption Weak rule of law Dewey 320 121 Département de science politique et relations internationales T3 false 003f1b45-5755-4342-9d46-61a5de058265 Thesis Public Flexibility_matters_Final.pdf 3279599 application/pdf 3a443407b53f630ddd656dda51bf753c680969110bf12a9d4e8c8ac0ed7d1ac5 e033c837-4c58-43be-83db-e6d31643a0c6 Imprimatur Public Imprimature thèse.pdf 53422 application/pdf 9080fd9914e88b1bc44a8971aeac2ca3fbc235d23c5cacb740c2931326bd1943 openAccess Faculté des sciences de la société / Département de science politique et relations internationales

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Flexibility matters: Donors’ choices between companies, NGOs, and local partners in poor governance contexts				2024	362	197

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