Exploring official aid for development: an analysis of the Neo-institutional economy theory

Since the emergence of official aid to development (ODA), its role and effectiveness has been a subject of extensive debate in the political, economic and social arena. Indeed, the effectiveness of this international system of support to economies in development is questioned frequently given the problems of asymmetry of information from the agents, incomplete contracts, perverse incentives and transaction costs, among others, which affect their quality and results. This article intends to make a reflection from the institutionaleconomics on the various problems and obstacles facing ODA. The central message is that it is necessary to carry out a series of institutional arrangements to ensure that the objective of received aid flows, so this mechanism will become one of the various relevant instruments in the fight against extreme poverty and in general, the implementation of the Millennium Development Goals (MDGs).