Inaccessibility and Compliance: Is There a Streetlight Effect in Foreign Aid?

Presenting at the Individuals in International Policy Workshop (with Ben Gottfried).

Why do some foreign aid projects have severe negative social and environmental externalities that often overwhelm the benefits of providing foreign aid in the first place? We argue that a key reason pertains to the inaccessibility of projects, which makes supervision more costly and less feasible. By the same token, higher-quality project leaders have agency to overcome some of these more structural constraints to supervision and development. To test our pre-registered hypotheses, we use Open Street Map data to analyze whether driving times to reach projects affect compliance with World Bank social and environmental safeguard policies. Consistent with our pre-analysis plan, we find results indicating a streetlight effect phenomenon: aid externalities are a function of the extra work and structural difficulties associated with their prevention. Interaction analyses also confirm that higher-quality project leaders are sometimes--though not always--able to better mitigate negative aid externalities. At the highest possible level, our results speak to how bureaucrats make rational calculations to focus their finite attention mostly not on intractable logistics and structural problems. [Preliminary Draft Paper]