Transnational sustainable development—that is, sustainable development policy initiatives involving actors in multiple countries—often involves donor sponsorship of sustainable development projects, similar to matching markets like venture capital, employment searches, or college admissions. These transaction systems, also known as matching markets, can be seen in a variety of phenomena in transnational development governance, including private aid, public–private sustainable development projects, and transnational polycentric governance initiatives. In this paper, we utilize the matching market framework to develop a new approach to addressing an important question in development studies: how do donors (understood as donor agencies, funds and foundations, and firms) choose which projects to support? Beginning with the observation that matching markets in sustainable development governance are heavily constrained by transaction costs in the absence of formal institutions that lower costs of searching, monitoring, and communicating with potential partners, we hypothesize that both donors and project participants are motivated to utilize strategies to lower transaction costs of making connections, which results in selection of projects based on the presence of transnational brokers or familiar partners or as part of a strategy of spatial specialization. Conceptualizing the choices made in this matching market as an affiliation network connecting donors to sponsored projects, we utilize exponential random graph models of 91 funders’ support of 195 Reducing Emissions from Deforestation (REDD+) and sustainable forest management pilot projects undertaken between 1989 and June 2012 to test the effects of transaction costs on donors’ choices of projects to sponsor. We find that brokerage, prior collaboration with the donor in question, and spatial specialization all contribute to the ability of project proponents to attract funder support, often outperforming relevant project characteristics such as carbon density and accessibility. These findings suggest tensions between local scale project implementation and the transnational search for resource support observed qualitatively in the development studies literature can have significant effects on the overall structure of transnational collaboration on sustainable development.
- Matching markets
- Transaction costs