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Can Foreign Aid Give an Incentive for Good Governance? The Case of the Millennium Challenge Corporation in Jordan

By Robert R Landicho


This study of the Millennium Challenge Corporation's (MCC) involvement in Jordan has the following objective: to determine whether the MCC can create an incentive for good governance and hold countries to a higher level of institutional scrutiny through aid disbursement. Through interviews with MCC officials in Washington, D.C. and government officials in Jordan, this paper shows that both the MCC and the Jordanian Government act strategically in pursuit of their interests, and this significantly shapes the strength of the incentive effect. The author uses a principal-agent model of behavior to examine the relationships between these organizational actors and within the organizations themselves. He also examines the dynamics of political survival in Jordan through rent-seeking behavior. A two-level game is developed from this analysis to model donor-recipient interactions within this important contemporary case study

Topics: Millennium Challenge Corporation, Jordan, US Foreign Assistance, International Relations, Government
Year: 2008
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