This excellent book makes a significant contribution to our understanding of the factors of success and failure of foreign aid full of interesting insights into the operation of real-world aid mechanisms. The use of agency theory gives the book considerable conceptual unity and reinforces its message this is an excellent example of applied economics at its best, using models that deal realistically with real problems to throw light upon relevant and important questions. It should interest a large number of economists and other professionals involved in or concerned with foreign aid and development cooperation. In fact, at least the opening chapter should be made compulsory reading for all such professionals, since this would be likely both to increase their effectiveness and decrease their levels of frustration. It would also not surprise me if the publication of this book would trigger a stream of related studies Development and Change.