Tied aid refers to aid that is granted to developing countries on the condition that goods and services for the aid-financed projects are purchased from the donor country only. The recipient country, in order to receive the grant or the loan, has no other choice but to fulfill the condition imposed by the donor. Economists have shown that tying aid undermines the effectiveness of aid. It leads to higher costs paid for the goods and services purchased and the distortion of the nature of the aid. Further, tying aid frustrates aid's potential in fostering trade between developing countries. In...