The Cost of Tying Aid: A Method and Some Comlumbian Estimates

Abstract

In an ever more determined effort to prevent its foreign economic aid from hurting its balance of payments, the United States placed increasing restrictions during the 1960s on the manner in which its aid could be spent. Although the tying techniques are rarely precise and the results are difficult to measure, it is now generally conceded taht the U.S. balance-of-payments goal has been essentially achieved. Inevitably, however, the very success of policies directed at changing the preferred expenditure patterns of the aid-receiving less developed countries (i.e., LDCs) has imposed costs on them. It is toward the identification and measurement of these costs that this paper is directed.