Agent Based Modelling of Aid

The issue of modelling international financial aid to underdeveloped countries baffled economists for decades. The initial assumptions (that outside aid could help bolster up the internally insufficient investment, thus helping economic growth) were statistically proven wrong; most of the recipient countries did not experience rapid growth, rather an increasing dependence on foreign aid. The question arises: what causes some countries to use the aid successfully whereas most fail to do so? What is the underlying reason for this difference across regions? And how could it be modelled? In this paper I would like to show, that a hierarchical agent-based model might be able to model the complex international cooperation among aid-giving organizations and recipient countries, so that some light could be shed on the mechanics of efficient aid distribution.