The proposed CIG will advance a high-impact, socially-relevant research agenda on the political consequences of new forms of development assistance. The project is of particular relevance to the EU and its member states given that European development agencies are dramatically increasing allocations to new aid modalities, such as direct subsidies to recipient countries’ national budgets. For instance, the 10th European Development Fund (EDF) allocates €13.5 billion or 44% of its portfolio to budget support in ACP countries.The proposed research investigates why some bilateral and multilateral aid donors are increasingly willing to fund aid programs that give recipient governments a large amount of control over where and how aid money is spent. The shift towards these aid modalities is interesting given that governance and institutional capacity in recipient countries remains poor and there is little evidence that such approaches are more effective. The project will generate original empirical data and theory on how foreign aid influences domestic political processes in recipient countries and how the logic of bargaining between donors and recipient governments can explain a variety of observable outcomes in development policy. While it is well known that aid dependence alters recipient governments’ incentives for cooperation and good governance, the bargaining process between donors and recipient governments remains poorly understood.In addition to generating fundamental scientific knowledge about donor-government relations, the findings of this study will be directly applicable to the design and implementation of more effective development assistance. As the PI comes from the US academic context, CIG support for her integration into the European research community will dramatically enhance the academic and societal impact of her research. Key outputs include academic articles, policy briefs, and stakeholder conferences in Brussels and four African countries