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Untied aid


Assistance to other countries, usually less developed countries, which can be spent on goods and services from any country. This is contrasted with tied aid, which has to be spent on goods and services from the donor country. Untied aid may be of greater value than tied aid of an equal amount, as tying restricts the choices open to the recipient, though where the recipient imports a lot from the donor in any case tying may be redundant. As untied aid may cause balance-of-payments problems for the donor, less aid may be available if it is given on an untied basis.

Reference: Oxford Press Dictonary of Economics, 5th edt.