ABSTRACT
The practice of tying aid, which implies that the recipient must use the foreign aid it receives to buy goods and services from the donor significantly reduces the quality of aid. Developing countries are not only forced to pay higher prices because of lack of competition, but they also face heavy administrative burdens from dealing with too many donors and too many procedures. In contrast, donors claim that it is a way to preserve their special relationships with specific developing countries, boost their exports and employment rates, and, consequently, enhance public and business support for higher volume of aid. Even though calls to eliminate the practice of tying aid had been made for more than forty years by a number of actors (i.e. various countries, international organisations and NGOs), little progress had been achieved until in May 2001 the Development Assistance Committee (DAC) adopted a recommendation to untie aid to the Least Developed Countries, which, however, excluded technical co-operation and food aid.
