The economic and psychological effects of cash transfers in development cooperation

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Against the backdrop of increasing popularity as an instrument of international development cooperation, our paper examines the economic and psychological effects of cash transfers. At this moment, this paper specifically focuses on the reaction of local markets and the structural conditions for a successful implementation as well as the effects of cash-transfers on their recipients' self-esteem and on the self-actualisation of women in developing countries. While the data was collected via semi-standardised guideline interviews with experts, the interpretation was carried out in accordance with Philipp Mayring's qualitative content analysis. Our study finds that cash transfers seldomly cause inflationary effects while they particularly require functioning markets, existing value chains and fulfilment of governmental support functions for a successful implementation. While the impact of cash transfers on the psychological constructs in question is generally assessed positively by the interviewed experts, several implications and potential psychological downsides are addressed.

Translated title of the contributionDie ökonomischen und psychologischen Effekte von Geldtransfers in der Entwicklungszusammenarbeit
Original languageEnglish
JournalInternational Journal of Economics and Business Research
Issue number4
Pages (from-to)433-457
Number of pages25
Publication statusPublished - 2021

Bibliographical note

Konstantin Muenchau holds a Bachelor’s degree with distinction in Business Psychology from Leuphana University of Lueneburg. His academic education focuses on the various psychological impacts in differing economic environments and frameworks. Currently, he is pursuing his Master studies in Philosophy and Business Administration at University of Mannheim. His research concentrates on the effects of cash transfers as instrument of modern development cooperation as well as on the multidimensional impact of social business and social entrepreneurship.

Augustin Suessmair is a Professor of Business Leadership, Strategy and Organisation at the Institute of Experimental Industrial Psychology – LüneLab at the Leuphana University of Lueneburg, Germany. He achieved his PhD from the University of Cologne and did research at the University of California at Berkeley. His work focuses on behavioural issues of individuals and groups in organisations as well as in markets. His research topics include behaviour, power and control issues in organisations. One of his research interests is strategy development and organisational behaviour in and of not-for-profit organisations.

    Research areas

  • Business psychology - development cooperation, cash transfer, unconditional cash transfer programs, cash benchmark, impact evaluation, income, poverty alleviation, direct investment, human capital