How to Deliver Foreign Aid? The Case of Projects Governed by the Spanish International Agency

International agencies use two alternative modes of governance to deliver international aid projects: under bilateral agreements with recipient governments (in-house), or through incumbent NGOs. Through the lenses of institutional and transaction cost economics, this article examines 95 international aid projects delivered in Morocco and Ecuador by the Spanish international agency finding that those projects delivered “in-house” present different features than those projects outsourced through incumbent NGOs. Specifically, international aid projects delivered “in-house” involve important investments in specific assets, are much more complex, and can turn the public agency into a hostage of its own disbursement.