GRANTS-IN-AID: THE ANALYTICS OF DESIGN AND RESPONSE

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Abstract
Theoretical attention is given to two aspects of intergovernmental aid programs. The relative responses of a recipient government are compared under various function specifications, matching requirements, and effort and performance provisions. Given normal indifference maps, the preferences of cost-minimizing donors (given targets) seem to be at odds with the interests of utility-maximizing recipients. The second section deduces the pattern of donor interest (demand) from the grants financial provisions. Through the use of a Bowen-type model and its associated fair cost divisions, implications are drawn for the grant schemes which would be associated with those donor demand patterns.

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