Tied aid is a kind of foreign aid. It must be spent on products and services provided by companies from the country providing the aid (the donor country) or in a group of specified countries.
A developed country provides a bilateral loan or grant to a developing country, but mandates that the money be spent on goods or services produced in the selected country. Conversely, untied aid is a type of foreign aid with no geographical restrictions.
In 2006, the Organisation for Economic Co-operation and Development (OECD) estimated that 41.7 percent of Official Development Assistance is untied aid.[1]
- ^ a b OECD. (2006). 2005 Development Co-operation Report. Volume 7, No. 1. Paris: OECD. ISBN 92-64-03651-2 Available for download: OECD Journal on Development, Development Co-operation Report 2005