Perceptions of foreign aid project quality in Bangladesh

Abstract

How does information about the presence of foreign financing in a development project change people’s perceptions of that project? Using an informational experiment in Bangladesh, we find that information about US financing of a specific development intervention sends a positive signal about project quality; this effect is concentrated among individuals who are the least likely to have been exposed to the information ex ante. The information does not change the already high demand for foreign aid but does help citizens target their demands toward the existing donor. That foreign funding can be a signal of project quality helps explain an existing finding in the literature that individuals prefer foreign aid projects to government projects.