We show that the impact of foreign aid on bureaucratic quality in recipient countries varies with the mode of delivery. Specifically, grants are found to impair the functioning of the bureaucracy, whereas loans are not. The negative impact of grants is larger when they are given as budget...

Work developed broadly within the Weberian tradition has argued, for a long time, that there is a link between effective bureaucratic institutions and economic development. In a widely cited article, Evans and Rauch (1999) have demonstrated that there is a strong relationship between a national...

This article argues for the establishment of performance-based financial incentive programs in developing countries that would pay politicians and high-level bureaucrats substantial bonuses (ten to twenty times or more of their official yearly salaries) to reduce corruption within their...