CHANGING DONOR LANDSCAPE IN VIETNAM
To mitigate the inefficient transaction costs of donor proliferation and increase the development benefits of aid , previous literature suggests that donors and recipient country governments should apply aid effectiveness principles of harmonization, alignment, and ownership. This study examined how donors and government agencies in Vietnam responded to donor proliferation in health sector aid between 1995 and 2012. Interviews were conducted with key informants from donor agencies, central government, and civil society in Hanoi in 2012.
This study found that donors and government officials responded to donor proliferation in Vietnam's health sector by endorsing aid effectiveness policies but implementing these policies inconsistently in practice.
Whereas previous literature has emphasized donor proliferation's transaction costs, this study finds that the benefits of a large number of less coordinated donors may outweigh the increased administrative costs under certain conditions. In Vietnam, these conditions included relatively high capacity within government, low government dependence on aid, and government interest in receiving diverse donor recommendations. Vietnam's experience of donor proliferation followed by donor withdrawal illustrates a trajectory that other countries may experience as they transition from low-to middle-income status.