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1 The concept of aid effectiveness  





2 History  



2.1  Cold War era  





2.2  Post Cold War  





2.3  The era of high level forums on aid effectiveness, 2002-2011  





2.4  The era of the effective development cooperation movement (2011 to present)  



2.4.1  Global monitoring rounds on development effectiveness commitments  



2.4.1.1  2016 global monitoring round  





2.4.1.2  2018 global monitoring round  











3 Findings and critiques on aid effectiveness  



3.1  Major critiques  



3.1.1  P. T. Bauer  





3.1.2  Dambisa Moyo  







3.2  Econometric Studies  



3.2.1  Challenges for measurement  





3.2.2  Major econometric studies and their findings  







3.3  Analyses of factors limiting aid effectiveness  



3.3.1  Aid fragmentation  





3.3.2  Volatility/unpredictability of aid  





3.3.3  Reducing the accountability of governments  





3.3.4  The tying of aid  









4 Ways to improve aid effectiveness  



4.1  Targeting aid more precisely  



4.1.1  Using the private sector  





4.1.2  Reform of state institutions  







4.2  Best practices according to the High Level Forums on Aid Effectiveness  



4.2.1  Improving aid transparency and mutual accountability of donors and recipients  









5 See also  





6 References  





7 External links  














Aid effectiveness: Difference between revisions






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→‎History: Added paragraph on Millikan and Rostow's theoretical framework for aid effectiveness
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== The concept of aid effectiveness ==

== The concept of aid effectiveness ==

Any discussion of "effectiveness" must rely on understandings or assumptions about aims. In public discussions of aid effectiveness, the general aim is usually assumed to be boosting the development of recipient countries and, hence, the well-being of people living in them. But "[[International development|development]]" and "well-being" are complex and slippery concepts. The most popular summary indicator for a country's development is probably average national income per head in its population, but this indicator does not capture inequalities of wealth and power, or the structural characteristics of the country's institutions and economy.<ref>{{Cite book|last=Mahbub ul Haq |display-authors=etal |url=http://hdr.undp.org/sites/default/files/reports/219/hdr_1990_en_complete_nostats.pdf|title=Human Development Report 1990|publisher=UNDP|year=1990|access-date=2021-03-01}}</ref> Since the 1990s the prime purpose of aid has widely been seen as poverty reduction, but this, too, can be interpreted in a variety of ways (How soon? How sustainable? What level?).<ref name=":5">{{Cite web|last=Barder|first=Owen|date=2009|title=What Is Poverty Reduction?|url=https://www.cgdev.org/sites/default/files/1421599_file_Barder_Poverty_Reduction.pdf|url-status=live|website=Centre for Global Development}}</ref> Such ambiguities should be clarified or at least borne in mind when considering aid effectiveness.<ref name=":5" />

Any discussion of "effectiveness" must rely on understandings or assumptions about aims.<ref>{{cite report|url=https://openknowledge.worldbank.org/bitstream/handle/10986/9296/wps4005.pdf|title=What is effective aid? How would donors allocate it?|last1=Kenny|first1=Charles|date=September 2006|publisher=World Bank|page=2-3|access-date=2021-03-05}}</ref> In public discussions of aid effectiveness, the general aim is usually assumed to be boosting the development of recipient countries and, hence, the well-being of people living in them. But "[[International development|development]]" and "well-being" are complex and slippery concepts. The most popular summary indicator for a country's development is probably average national income per head in its population, but this indicator does not capture inequalities of wealth and power, or the structural characteristics of the country's institutions and economy.<ref>{{Cite book|last=Mahbub ul Haq |display-authors=etal |url=http://hdr.undp.org/sites/default/files/reports/219/hdr_1990_en_complete_nostats.pdf|title=Human Development Report 1990|publisher=UNDP|year=1990|access-date=2021-03-01}}</ref> Since the 1990s the prime purpose of aid has widely been seen as poverty reduction, but this, too, can be interpreted in a variety of ways (How soon? How sustainable? What level?).<ref name=":5">{{Cite web|last=Barder|first=Owen|date=2009|title=What Is Poverty Reduction?|url=https://www.cgdev.org/sites/default/files/1421599_file_Barder_Poverty_Reduction.pdf|url-status=live|website=Centre for Global Development}}</ref> Such ambiguities should be clarified or at least borne in mind when considering aid effectiveness.<ref name=":5" />



Under the main international definition of aid – [[Official Development Assistance]] – any self-seeking motives of aid donors are supposed to be strictly subordinate to the objective of promoting the economic development and welfare of developing countries.<ref>{{Cite web|title=Official Development Assistance (ODA)|url=https://www.oecd.org/dac/financing-sustainable-development/development-finance-standards/official-development-assistance.htm|url-status=live|access-date=2021-03-01|website=[[OECD]]}}</ref> Such motives – which may involve strategic alliances, diplomatic trade-offs, commercial advantages and other political benefits<ref>{{Cite web|last=Kenny|first=Charles|date=2006|title=What Is Effective Aid? How Would Donors Allocate It?|url=https://openknowledge.worldbank.org/bitstream/handle/10986/9296/wps4005.pdf|url-status=live|access-date=2021-03-01|website=[[The World Bank]]}}</ref> – are usually discussed as obstacles to aid effectiveness rather than alternative aims.

Under the main international definition of aid – [[Official Development Assistance]] – any self-seeking motives of aid donors are supposed to be strictly subordinate to the objective of promoting the economic development and welfare of developing countries.<ref>{{Cite web|title=Official Development Assistance (ODA)|url=https://www.oecd.org/dac/financing-sustainable-development/development-finance-standards/official-development-assistance.htm|url-status=live|access-date=2021-03-01|website=[[OECD]]}}</ref> Such motives – which may involve strategic alliances, diplomatic trade-offs, commercial advantages and other political benefits<ref>{{Cite web|last=Kenny|first=Charles|date=2006|title=What Is Effective Aid? How Would Donors Allocate It?|url=https://openknowledge.worldbank.org/bitstream/handle/10986/9296/wps4005.pdf|url-status=live|access-date=2021-03-01|website=[[The World Bank]]}}</ref> – are usually discussed as obstacles to aid effectiveness rather than alternative aims.


Revision as of 05:32, 5 March 2021

Aid effectiveness and Impact

Aid effectiveness is the degree of success or failure of international aid (development aidorhumanitarian aid). Concern with aid effectiveness might be at a high level of generality (whether aid on average fulfils the main functions that aid is supposed to have), or it might be more detailed (considering relative degrees of success between different types of aid in differing circumstances).

Questions of aid effectiveness have been highly contested by academics, commentators and practitioners: there is a large literature on the subject. Econometric studies in the late 20th century often found the average effectiveness of aid to be minimal or even negative. Such studies have appeared on the whole to yield more affirmative results in the early 21st century, but the picture is complex and far from clear in many respects.

Many prescriptions have been made about how to improve aid effectiveness. In 2003–2011 there existed a global movement in the name of aid effectiveness, around four high level forums on aid effectiveness. These elaborated a set of good practices concerning aid administration co-ordination and relations between donors and recipient countries. From 2011 this movement was subsumed in a set of international partnerships more broadly concerned with effective development cooperation.

The concept of aid effectiveness

Any discussion of "effectiveness" must rely on understandings or assumptions about aims.[1] In public discussions of aid effectiveness, the general aim is usually assumed to be boosting the development of recipient countries and, hence, the well-being of people living in them. But "development" and "well-being" are complex and slippery concepts. The most popular summary indicator for a country's development is probably average national income per head in its population, but this indicator does not capture inequalities of wealth and power, or the structural characteristics of the country's institutions and economy.[2] Since the 1990s the prime purpose of aid has widely been seen as poverty reduction, but this, too, can be interpreted in a variety of ways (How soon? How sustainable? What level?).[3] Such ambiguities should be clarified or at least borne in mind when considering aid effectiveness.[3]

Under the main international definition of aid – Official Development Assistance – any self-seeking motives of aid donors are supposed to be strictly subordinate to the objective of promoting the economic development and welfare of developing countries.[4] Such motives – which may involve strategic alliances, diplomatic trade-offs, commercial advantages and other political benefits[5] – are usually discussed as obstacles to aid effectiveness rather than alternative aims.

In the first decade of the 20th century, "aid effectiveness" was the declared focus of a movement joined by major donor and recipient countries and aid-related organisations, involving a series of high level forums on aid effectiveness. The agenda of this movement was largely about good practices in donor-recipient relationships, and in some cases these good practices became seen as proxies for aid effectiveness.[6]

History

Cold War era

Although US aid is widely credited with having hastened the reconstruction of western Europe after World War II, there have been doubts about the effectiveness of this aid. G. A. Duncan in 1950 deplored the governmental character of Marshall Aid, arguing that private loans could have achieved the economic purposes more efficiently. He acknowledged that the provision of official aid also had other – political – purposes.[7]

When US economic aid shifted from Europe to poorer countries – as initially signalled by President TrumaninPoint Four of his 1949 inauguration speech – the strategic framework was one of building a "free world" in the face of communist threat. In the 1950s, official US development assistance was mobilized alongside military aid within the Mutual Security Program.[8] A 1957 Senate Special Committee report admitted it was impossible to prove how effective US aid since World War II had been, but considered that, without it, several countries might have been lost to the Soviet Union's sphere of influence.[9] For greater clarity in future, the committee attempted to distill the purposes of US aid into four:

The first of these aid drivers could be seen, during the Cold War, as part of a competition with the Soviet Union to win influence.[11] But aid was often observed to fail in this respect; for instance, in the 1950s and 1960s Egypt and Afghanistan took aid from both sides without making a decisive commitment either way, and large Russian support to China and Indonesia did not prevent those countries' leaders turning against their former patron.[11]

A more detailed theory about the kinds of effect and the causal paths through which aid could be effective was developed by Max Millikan and Walt Rostow in the mid- to late-1950s, expressed in "A Proposal" of 1956. This propounded that aid in the form of investment funds could promote the "take-off" of economies into self-reliant growth. It further suggested that this economic transformation, channeled properly, could produce a free and democratic type of society by providing: a constructive outlet for nationalism; a social solvent by interesting the urban elites in a dynamic agricultural sector; a stimulus for the emergence of authentic leaders; incentives for the attitudes of political responsibility needed to support democratisation; and feelings of international solidarity.[12] Rostow later elaborated the "take-off" theory of development in his more famous work, "The Stages of Economic Growth", in which he stated that greatly increased economic aid was needed in order to outrace the effects of population growth.[13]

Widespread famine in Biafra during the Nigerian Civil War (1967–1970) led to greater NGO involvement in events like the Biafran airlift being attempted for the first time.[14] The way in which aid was allocated during the 1983–1985 famine in Ethiopia forever changed the way in which governments and NGOs respond to international emergencies taking place within conflict situations and raised disturbing questions about the relationship between humanitarian agencies and host governments.[15] In the 1980s and 1990s that NGOs played a greater part in international aid.[16]

Post Cold War

After the end of the Cold War, the declared focus of official aid began to move further towards the alleviation of poverty and the promotion of development. The countries that were in the most need and poverty became more of a priority. Once the Cold War ended, Western donors were able to enforce aid conditionality better because they no longer had geopolitical interests in recipient countries. This allowed donors to condition aid on the basis that recipient governments make economic changes as well as democratic changes.[17] It is against this background that the international aid effectiveness movement began taking shape in the late 1990s as donor governments and aid agencies began working together to improve effectiveness.

The era of high level forums on aid effectiveness, 2002-2011

The aid effectiveness movement made progress in 2002 at the International Conference on Financing for Development[18] in Monterrey, Mexico, which established the Monterrey Consensus. There, the international community agreed to increase its funding for development—but acknowledged that more money alone was not enough. Donors and developing countries alike wanted to know that aid would be used as effectively as possible. They wanted it to play its optimum role in helping poor countries achieve the Millennium Development Goals,[19] the set of targets agreed by 192 countries in 2000 which aimed to halve world poverty by 2015. A new paradigm of aid as a partnership, rather than a one-way relationship between donor and recipient, was evolving.

In 2003, aid officials and representatives of donor and recipient countries gathered in Rome for the High Level Forum on Harmonization.[20] At this meeting, convened by the Organization for Economic Co-operation and Development[21] (OECD), donor agencies committed to work with developing countries to better coordinate and streamline their activities at the country level. They agreed to take stock of concrete progress before meeting again in Paris in early 2005. In Paris, countries from around the world endorsed the Paris Declaration on Aid Effectiveness, a more comprehensive attempt to change the way donor and developing countries do business together, based on principles of partnership. Three years on, in 2008, the Third High Level Forum[22] in Accra, Ghana took stock of progress and built on the Paris Declaration to accelerate the pace of change. A fourth forum was held at Busan, South Korea, in 2011, concluding the series.

The era of the effective development cooperation movement (2011 to present)

In 2011 the dominant global agenda on "aid effectiveness" was subsumed in a broader movement for "effective development cooperation". This was embodied most prominently in the Global Partnership for Effective Development Co-operation (GPEDC) mandated at the Fourth High-Level Forum on Aid Effectiveness in Busan in 2011. Another global partnership that follows the "effective development cooperation" approach is UHC2030 (the International Health Partnership for Universal Health Care 2030), formerly known simply as the International Health Partnership (or IHP+).[23][24]

GPEDC brings together governments, bilateral and multilateral organisations, civil society, the private sector and representatives from parliaments and trade unions, among others, who are committed to strengthening the effectiveness of their partnerships for development. 161 countries and 56 organisations endorsed the creation of the GPEDC in the 2011 Busan Partnership agreement.

As a multi-stakeholder platform, GPEDC aims to advance the effectiveness of development efforts by all actors in delivering results that are long-lasting and contribute to the achievement of the Sustainable Development Goals. It provides practical guidance and shares knowledge to boost development impact. It offers a global mechanism to support country-level implementation of the international effectiveness principles agreed in Busan: country ownership, focus on results, inclusive partnerships; and transparency and accountability. As noted in the UN Secretary General's Synthesis report in 2015, GPEDC can “help review and strengthen the global partnership for sustainable development”.

GPEDC also tracks progress on the implementation of the commitments and actions agreed in Busan through its monitoring framework, which consists of a set of indicators, that focus on strengthening developing country institutions, increasing transparency and predictability of development co-operation, enhancing gender equality, as well as supporting greater involvement of civil society, parliaments and private sector in development efforts.

Global monitoring rounds on development effectiveness commitments

Starting in 2013, GPEDC took the lead in facilitating national monitoring exercises of the Busan development effectiveness commitments, which were then condensed into global monitoring reports. This process was a continuation of the Paris Declaration on Aid Effectiveness monitoring surveys, but this time under the leadership of each developing country and relying on multi-stakeholder participation.

2016 global monitoring round

Results from GPEDC's 2016 monitoring round reveal important progress towards achieving the development effectiveness goals agreed in Busan in 2011 at the Fourth High-Level Forum on Aid Effectiveness, especially in adopting a decisive focus on results for more impact at the country level, in setting good foundations for more effective partnerships amongst governments, civil society organisation, and the private sector; in improving transparency by making more publicly available information on development co-operation available than ever before, and in enhancing national budgetary systems to better capture development co-operation flows and allocations for gender equality.[25] In contrast, monitoring also reveals an overall need to adapt to a dynamic and evolving development landscape, as well as specific areas where a concerted effort is required to enhance development partnerships and unlock existing bottlenecks, including: increasing the use of countries’ own systems to deliver, manage, and track the impact of development programmes; and making countries’ efforts to strengthen domestic institutions more effective. Engagement and accountability structures at country level around development co-operation also need to become more inclusive and transparent, in order to facilitate meaningful dialogue and joint action.[25]

2018 global monitoring round

The 2018 monitoring round revealed that the 86 participating developing countries have made significant progress in strengthening national development planning, and that overall mutual accountability mechanisms in developing countries are becoming more inclusive. However, the monitoring results highlighted a decline in donor countries’ alignment to developing countries’ priorities and results frameworks; moreover, the forward visibility of development cooperation is decreasing, which contrasts with the global commitment to improving aid predictability. Civil society organisations were also found to be experiencing a deterioration in the conditions and overall environment for them to operate and contribute to development. The monitoring results further revealed that improving the quality of public-private dialogue in developing countries requires increased capacity, strengthened relevance and the inclusion of a wide range of private sector actors.[26]

Findings and critiques on aid effectiveness

There is wide agreement that aid alone is not enough to lift developing countries out of poverty and that it is not the most powerful potential instrument for promoting this end. The debates on aid effectiveness are over the degree of significance of aid's effects, the extent of its unfavourable effects, and the relative effectiveness of different kinds of aid.

Major critiques

P. T. Bauer

British economist P. T. Bauer argued that aid did more harm than good, notably in his books "Dissent on Development" (1972)[27] and "Reality and Rhetoric" (1984).[28] The main harmful effect was that aid channelled resources through governments, enabling inefficient state planning and producing a general "politicization of life" in which the population shifted its activities to the political sphere rather than the economic one.[29] On the other side, Bauer saw aid's benefits as being limited to the avoidance of commercial loan costs, which he did not consider to be a significant factor in countries' development (pp. 47-49). He believed that the choices of aid projects were usually controlled by governments less interested in alleviating poverty than enriching the elite (pp.49-52).

Dambisa Moyo

Noted Zambian economist Dambisa Moyo has been a fierce opponent to development aid, and calls it “the single worst decision of modern developmental politics”. Her 2009 book, Dead Aid describes how aid has encouraged kleptocracies, corruption, aid-dependency and a series of detrimental economic effects and vicious downward spirals of development in Africa. She argues that foreign aid provides a windfall to governments which can encourage extreme forms of rent-seeking and through providing a positive shock of revenue, lead to Dutch Disease. Furthermore, this easy money offers governments an exit from the contract between them and their electorate: the contract that states that they must provide public goods in exchange for taxes. In short, it "allows the state to abdicate its responsibilities toward its people".[30] It is important to note that Moyo alludes specifically to government bilateral and multilateral aid and not small-holder charity, humanitarian or emergency aid. Her prescriptions call for increased trade and foreign direct investment, emphasizing China's burgeoning role in Africa.[31] Moyo also makes a case for micro-financing schemes, as popularized by the widespread success of Grameen Bank, to spark entrepreneurship within the continent on the ground level, thus building from the bottom-up as opposed to the top-down approach aid takes.

Econometric Studies

Many econometric studies have attempted to establish broad conclusions about aid, using regression analysis on a panel of recipient countries (seeing if their differing amounts and timings of aid received could be correlated with development indicators). These have created a mixed picture on the average effectiveness of aid, but one in which pessimism in the late 20th century has seemed to yield to qualified optimism in the early 21st century.[32] See the table in the sub-section on "Major econometric studies and their findings", below.

Challenges for measurement

It must be borne in mind that such econometric studies face many problems. One challenge for assessing the effectiveness of aid is that aid is intended to serve a variety of purposes: some of it is aimed primarily at poverty alleviation, some at economic growth, and some at other objectives such as better governance or reduction of social inequalities. Often it is not very clear what objectives are foremost, making it hard to measure results against intentions.[33] Roodman (2007), for instance, discovered that the results of seven previous econometric studies – including the very influential one by Burnside and Dollar (1997, 2000) – could not survive defining key terms in other plausible ways.[34] Moreover, different objectives have different implications for the time-scale in which results should be sought.[35] Varying sectors and modalities of aid have different effects, as do the contextual factors in recipient countries.[36] However, increasingly sophisticated analyses have made progress in accounting for these complicated effects.[35][36]

Econometric studies frequently show more pessimistic results than might be expected from the accumulation of successes reported by donor and implementing agencies in their projects and programs. Paul Mosley termed this the micro-macro paradox and offered three potential explanations: inaccurate measurement, fungibility, and "backwash" or negative side-effects of component aid projects.[37] The micro-macro paradox has also been attributed to inadequate assessment practices. For example, conventional assessment techniques often over-emphasize inputs and outputs without taking sufficient account of societal impacts. The shortcomings of prevalent assessment practices have led to a gradual international trend towards more rigorous methods of impact assessment.[38]

Major econometric studies and their findings

The main findings of major econometric studies are summarized in the following table.

Table of econometric studies on aid effectiveness
Author/year[39] Period Findings on aid effectiveness

Template:Alternating rows table section

Analyses of factors limiting aid effectiveness

Aid fragmentation

Aid flows significantly increased in the first decade of the 21st century, but at the same time aid has became increasingly fragmented. There was an explosion in the number of donors, and while the number of projects multiplied, their average size dropped. Small projects being often limited in size, scope and duration, they resulted in little lasting benefit beyond the immediate effect.[40] With more players, aid became less predictable, less transparent and more volatile.[41]

Fragmentation means an increase in costs for recipient countries, as government offices are forced to divert administrative resources to cope with requests and meetings with donors[42] Decades of development have shown that if countries are to become less dependent on aid, they must follow a bottom-up approach, where they determine their own priorities and rely on their own systems to deliver that aid.[43]

Volatility/unpredictability of aid

Information, at the donors' as well at the recipients' level, is often poor, incomplete and difficult to compare with other data, and beneficiaries' feedback and formal project evaluations are rare. Aid is predictable when partner countries can be confident about the amount and the timing of aid disbursement. Not being predictable has a cost: one study assessed the deadweight loss associated with volatility at an average of 10% to 20% of a developing country's programmable aid from the European Union in recent years.[44]

Reducing the accountability of governments

Revenue generation is one of the essential pillars for developing state capacity. Effective taxation methods allow a state to provide public goods and services, from ensuring justice to providing education.[45] Taxation simultaneously serves as a government accountability mechanism, building state-citizen relationships, as citizens can now expect such service provisions upon their consent to taxation. For developing and fragile states that lack such revenue capabilities, while aid can be a seemingly necessary alternative, it has the potential to undermine institutional development. States that rely on higher percentages of aid for government revenue are less accountable to their citizens by avoiding the state-citizen relationships that taxation builds and face fewer incentives to develop public institutions.[46] The limited government capacity resulting from subpar institutional presence and effectiveness leads to: “ubiquitous corruption of state officials, large gaps between the law and actual practice in business regulation, workers who do not even show up, doctors that do not doctor, teachers who do not teach.”[47]

In the view of James Shikwati, aid in Africa sustains political elites who implement a colonial or neo-colonial agenda of subsidy and distortion of markets which holds African countries back.[48]

The tying of aid

Tied aid is defined as project aid contracted by source to private firms in the donor country. It refers to aid tied to goods and services supplied exclusively by donor country businesses or agencies. Tied aid increases the cost of assistance and has the tendency of making donors to focus more on the commercial advancement of their countries than what developing countries need. There are many ways aid can be designed to pursue the commercial objectives of donors. One of such pervasive means is by insisting on donor country products.

Others have argued that tying aid to donor-country products is common sense; it is a strategic use of aid to promote donor country's business or exports. It is further argued that tied aid - if well designed and effectively managed - would not necessarily compromise the quality as well as the effectiveness of aid.[49] However, this argument would hold particularly for programme aid, where aid is tied to a specific projects or policies and where there is little or no commercial interest. It must be emphasized, however, that commercial interest and aid effectiveness are two different things, and it would be difficult to pursue commercial interest without compromising aid effectiveness. Thus, the idea of maximizing development should be separated from the notion of pursuing commercial interest. Tied aid improves donors export performance, creates business for local companies and jobs. It also helps to expose firms, which have not had any international experience on the global market to do so.[50]

Ways to improve aid effectiveness

Targeting aid more precisely

Using the private sector

According to Laurie Garrett, for health aid to be maximized efficiently and most optimally, donations need to be directed to areas such as local industries, franchises, or profit centers in developing countries. By doing so, these actions can sustain health related spending and result in growth in the long run.[51]

Paul Collier, in The Bottom Billion, suggests a model he calls “Independent Service Authorities”. These are organizations, independent from the government, that co-opt civil society to manage aid and public money and incorporate the scrutiny of public opinion and NGOs to determine how to maximize output from the expenditure of this money.[52]

William Easterly tells a story in The White Man’s Burden, where he says that helping the approximate three million people infected with Malaria each year may not be as simple as sending nets over to Africa. A lot of the time, these nets are diverted to the black market and used for more entrepreneurial pursuits, for example, making fishing nets out of them. Easterly does go on to report however that when schemes are introduced where mosquito nets are available on the market for an affordable price, the usage of them increases drastically.[53] He advocates the use of localized, tailored schemes like this to help the world's poor and discounts ambitious overarching schemes that claim to be a complete panacea for poverty.

Reform of state institutions

Noted Peruvian economist, Hernando De Soto, in his book, The Mystery of Capital also firmly asserts that Africa already has the resource wealth it needs to pull itself out of poverty, it just lacks the institutions that allow for the creation of wealth from these riches. Poor documentation of assets and the lack of property rights means that people cannot collateralize their assets, for example, if a farmer inhabits a tract of land that has been in his family for generations, in his view, for all intents and purposes, he owns the land. However he does not possess a title deed to the land that clearly demarcates the borders of his ownership, this means that he cannot put up this land as collateral to secure a loan. This simplistic example can help to explain why investment (and therefore growth) is inhibited, the spirit of entrepreneurship may be present, the tools to engage in it, however, are not. The answer therefore seems simple: create such institutions that provide transparent documentation of assets and allows them to be converted to liquidity with ease. In practice, however this may not be so simple and would involve major overhauls in the bureaucratic fabric of a state. How aid can help to foster better institutions then, becomes the main question.

Best practices according to the High Level Forums on Aid Effectiveness

The Paris Declaration and other results of the High Level Forums on Aid Effectiveness (2003-2011) embodied a broad consensus on what needed to be done to produce better development results.[54] Its principles lay open the possible ways to undertake, which can be interpreted also as the major objectives of good aid: fostering recipient countries' ownership of development policies and strategies, maximizing donors' coordination and harmonization, improving aid transparency and mutual accountability of donors and recipients, just to name a few.[55]

The forums were supported by work done by the OECD, which had explored—through peer reviews and other work by the Development Assistance Committee (DAC)—the reasons why aid has and has not worked. This has resulted in a body of best practices and principles that can be applied globally to make aid work better.

Improving aid transparency and mutual accountability of donors and recipients

Some believe that the way to improvement is through better monitoring and evaluation, increased transparency, accountability and learning. For instance, Stefan Schmitz, a former senior aid official in the German government and the OECD, has argued that reporting duties, results-orientated action and ongoing performance assessments are essential for the sake of aid effectiveness, but political will must be already there for this to happen.[56]

The Accra Agenda for Action states that transparency and accountability are essential elements for development results, as well as drivers of progress.[57] Mutual accountability and transparency is one of the five partnership commitments of the Paris Declaration.[58] Through 'transparency', donors and recipients can be held accountable for what they spend and aid can be made more effective by knowing the three Ws of transparency:

Transparency offers a valuable answer to insecurity, making aid "predictable" and "reliable". Transparency has been shown to improve service delivery and to reduce opportunities for diversion and therefore corruption.[60]

Transparency can be defined as a basic expression of mutual accountability.[61] Mutual accountability can only work if there is a global culture of transparency that demands provision of information through a set of rules and behavioral norms, which are difficult to enforce in the case of official development cooperation. In particular for emerging economy donors and private development assistance, these norms are only at a nascent stage. Kharas[62] suggest to adopt the "regulation through information" approach,[63] which has been developed and has proven its effectiveness in the case of the European integration. In fact, at the international level, when the enforcement of mandatory rules is difficult, the solution could be to provide and make available transparent, relevant, accurate and reliable information, which can be used to reward or sanction individual aid agencies according to their performances. This means establishing a strong culture of accountability within aid, which rewards aid successes but penalizes failures.

To achieve this, literature on the topic[64] suggest that donors should agree on adopting a standardized format for providing information on volume, allocation and results, such as the International Aid Transparency Initiative (IATI), or other similar standards, and commit to improve recipient countries' databases with technical, financial and informational support. The format should be easily downloadable and with sufficient disaggregation to enable comparison with other data. Making aid data public and comparable among donors, would be likely to encourage a process of positive emulation towards a better usage of public funds. After all, official development assistance (ODA) is a voluntary transfer that depends on the support of donor country taxpayers. Donors should therefore consider improving the transparency and traceability of aid funds also as a way of increasing engagement and support toward aid inside their own country. Moreover, a generalized adoption of IATI would ensure the publication of aid information in a timely way, the compatibility with developing countries' budgets and the reliability of future projections, which would have a strong and positive effect on the predictability of aid.[65]

Finally, to improve accountability while building evaluation capabilities in aid recipient countries and systematically collecting beneficiaries’ feedback, different mechanisms to evaluate and monitor transparency should be considered, such as independent third-party reviews, peer reviews or mutual reviews.[66]

See also

References

  1. ^ Kenny, Charles (September 2006). What is effective aid? How would donors allocate it? (PDF) (Report). World Bank. p. 2-3. Retrieved 2021-03-05.
  • ^ Mahbub ul Haq; et al. (1990). Human Development Report 1990 (PDF). UNDP. Retrieved 2021-03-01.
  • ^ a b Barder, Owen (2009). "What Is Poverty Reduction?" (PDF). Centre for Global Development.{{cite web}}: CS1 maint: url-status (link)
  • ^ "Official Development Assistance (ODA)". OECD. Retrieved 2021-03-01.{{cite web}}: CS1 maint: url-status (link)
  • ^ Kenny, Charles (2006). "What Is Effective Aid? How Would Donors Allocate It?" (PDF). The World Bank. Retrieved 2021-03-01.{{cite web}}: CS1 maint: url-status (link)
  • ^ Mitchell, Ian; McKee, Caitlin (15 November 2018). "How Do You Measure Aid Quality and Who Ranks Highest?". Center for Global Development. Retrieved 2021-03-01.{{cite web}}: CS1 maint: url-status (link)
  • ^ Duncan, G. A. (1950). "Marshall Aid". Journal of the Statistical and Social Inquiry Society of Ireland. 18: 293.
  • ^ Haviland, H. Field (1958). "Foreign Aid and the Policy Process: 1957". American Political Science Review. 52 (3): 689–724. doi:10.2307/1951900. ISSN 1537-5943.
  • ^ US Senate Special Committee (1957). Report of the special committee to study the foreign aid program. United States Government Printing Office. pp. 7–8.
  • ^ US Senate Special Committee (1957). Report of the special committee to study the foreign aid program. United States Government Printing Office. pp. 8–10.
  • ^ a b Morgner, Aurelius (1967). "The American Foreign Aid Program: Costs, Accomplishments, Alternatives?". The Review of Politics. 29 (1): 72–73. ISSN 0034-6705.
  • ^ Millikan, Max F (1957). A proposal: Key to an effective foreign policy. New York: Harper & Brothers.
  • ^ Rostow, W. W. (1962). The Stages of Economic Growth. Cambridge University Press. p. 143.
  • ^ Omaka, Arua Oko (1 June 2016). "Humanitarian Action: The Joint Church Aid and Health Care Intervention in the Nigeria-Biafra War, 1967–1970". Canadian Journal of History. 49 (3): 423–227. doi:10.3138/cjh.49.3.423.
  • ^ Waal, Alexander De (1991). Evil Days: Thirty Years of War and Famine in Ethiopia. Human Rights Watch. p. 2. ISBN 9781564320384.
  • ^ Lewis D. (2010) "Nongovernmental Organizations, Definition and History" (PDF). In: Anheier H.K., Toepler S. (eds) International Encyclopedia of Civil Society. Springer, New York, NY.
  • ^ Dunning, Thad. "Conditioning the Effects of Aid: Cold War Politics, Donor Credibility, and Democracy in Africa." International Organization 58.02 (2004)
  • ^ "International Conference on Financing for Development". Un.org. Retrieved 2012-12-26.
  • ^ "United Nations Millennium Development Goals". Un.org. 2008-09-25. Retrieved 2012-12-26.
  • ^ "Aid Harmonization: The Collective Efforts to Increase Aid Effectiveness | Banking Sense". Retrieved 2019-07-04.
  • ^ "OECD.org - OECD". www.oecd.org. Retrieved 2019-07-04.
  • ^ [accrahlf.net]
  • ^ "uhc2030: History". UHC2030. Retrieved 2021-02-27.{{cite web}}: CS1 maint: url-status (link)
  • ^ "IHP+ Strategic Directions 2016-17" (PDF). uhc2030. Retrieved 2021-02-27.{{cite web}}: CS1 maint: url-status (link)
  • ^ a b OECD/UNDP (2016). Making Development Co-operation More Effective: 2016 Progress Report. Retrieved on 09 Dec 2016 from http://effectivecooperation.org/2016/11/2016-monitoring-report-released/
  • ^ "Making Development Co-operation More Effective, 2019 Progress Report - GPEDC". www.oecd.org. Retrieved 2020-05-20.
  • ^ Bauer, P. T. (1976). Dissent on development. Cambridge, Mass.: Harvard University Press. ISBN 0-674-21282-7. OCLC 2666082.
  • ^ Bauer, P. T. (1984). Reality and rhetoric : studies in the economics of development. Cambridge, Mass.: Harvard University Press. ISBN 0-674-74946-4. OCLC 9894295.
  • ^ Bauer, P. T. (1984). Reality and rhetoric : studies in the economics of development. Cambridge, Mass.: Harvard University Press. pp. 27–28, 46. ISBN 0-674-74946-4. OCLC 9894295.
  • ^ Moyo, Dambisa (2009). Aid: Why Aid Is Not Working and How There Is a Better Way for Africa. Douglas & Mcintyre. ISBN 978-1-55365-542-8.
  • ^ Moyo, Dambisa (2009). Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa. Douglas & Mcintyre. p. 124.
  • ^ Mahembe, Edmore; Odhiambo, Nicholas M. (2019-01-01). Read, Robert (ed.). "Foreign aid and poverty reduction: A review of international literature". Cogent Social Sciences. 5 (1): 1625741. doi:10.1080/23311886.2019.1625741. ISSN 2331-1886.
  • ^ Barder, Owen (2009-04-21). "What is Poverty Reduction?". CGD Working Papers. Retrieved 2010-06-02.
  • ^ Roodman, David (2007). "The Anarchy of Numbers: Aid, Development and Cross-Country Empirics". The World Bank Economic Review. 21 (2): 255–277. doi:10.1093/wber/lhm004. hdl:10.1093/wber/lhm004. S2CID 14359188.
  • ^ a b Clemens MA; et al. (2011). "Counting Chickens when they Hatch: Timing and the Effects of Aid on Growth". The Economic Journal. 122 (561): 590–617. doi:10.1111/j.1468-0297.2011.02482.x.
  • ^ a b Petrikova, Ivica (2015). "Aid for food security: does it work?" (PDF). International Journal of Development Issues. 14: 41–59. doi:10.1108/IJDI-07-2014-0058.
  • ^ Mosley, Paul (1987). Foreign Aid: Its Defense and Reform. University Press of Kentucky. ISBN 978-0-8131-1608-2. Retrieved December 7, 2009. Paul Mosley.
  • ^ Faust, Jörg (2009). "Reliable evidence of impact". Development and Cooperation. 36 (1): 14–17. Archived from the original on 2010-02-27.
  • ^ Bibliographic reference to be given in a note
  • ^ Fengler, M.G and Kharas, H. Delivering Aid Differently: Lesson from the Field. Brookings Institution, Washington D.C. 2010.
  • ^ Kharas, H., Makino, K., Jung, W. Catalizing Development. Brookings Institution Press, Washington D.C. 2011
  • ^ As an example, in 2005, government authorities in Vietnam received 791 missions from donors, which means more than two a day, including weekends and holidays. See, for example, OECD, DAC, "The Challenge of Capacity Development: Working Towards Good Practice", Paris, 2006.
  • ^ Deutscher, E., and Fyson, S., "Improving the Effectiveness of Aid", Finance and Development, Vol. 25, n. 3, The International Monetary Fund, September 2008.
  • ^ Kharas, H. "Measuring the Cost of Aid Volatility". Wolfensohn Centre for Development, Working Parper 3, Brookings Institution, Washington D.C. 2008
  • ^ Bräutigam, Deborah (2002). "Building Leviathan: Revenue, State Capacity and Governance" (PDF). IDS Bulletin. 33 (3): 1–17. doi:10.1111/j.1759-5436.2002.tb00034.x.
  • ^ "An Aid-Institutions Paradox? A Review Essay on Aid Dependency and State Building in Sub-Saharan Africa- Working Paper 74". Center For Global Development. Retrieved 2017-05-17.
  • ^ Pritchett, Lant; Woolcock, Michael; Andrews, Matt (2013-01-01). "Looking Like a State: Techniques of Persistent Failure in State Capability for Implementation" (PDF). The Journal of Development Studies. 49 (1): 1–18. doi:10.1080/00220388.2012.709614. ISSN 0022-0388. S2CID 14363040.
  • ^ Shikwati, James (2006). "The Future of Africa in the World". Inter Region Economic Network: 6. Archived from the original on 2013-06-17.
  • ^ Aryeetey, 1995; Sowa 1997.
  • ^ Tied Aid and Multi-Donor Budgetary Support, Journal of International Development, Vol 17. Issue 8
  • ^ Garrett, Laurie. 2007. The Challenge of Global Health. Foreign Affairs 86 (1):14-38]
  • ^ Collier, Paul (2007). The Bottom Billion: Why the Poorest Countries Are failing and What Can Be Done about It. Oxford.
  • ^ Easterly, William (2006). The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done so Much Ill and so Little Good. New york: Penguin Press.
  • ^ "Effective development co-operation - OECD". www.oecd.org. Retrieved 2019-07-04.
  • ^ See OECD, "The Paris Declaration on Aid Effectiveness". March 2, 2005.
  • ^ "Comprehensive thinking". Archived from the original on 2010-07-06. Retrieved 2010-03-11.
  • ^ OECD, "The Accra Agenda For Action", 3rd High Level Forum on Aid Effectiveness, September 4, 2008.
  • ^ OECD, "The Paris Declaration on Aid Effectiveness". March 2, 2005.
  • ^ Kharas, H., "Transparency: Changing the Accountability Engagement, and Effectiveness of Aid", in: Kharas, H., Makino, K., Jung, W., "Catalyzing Development", Brookings Institution Press, Washington, D.C. 2011.
  • ^ Bjorkman, M., Svensson, J., "Power to the People: Evidence from a Randomized Field Experience on Community-Based Monitoring in Uganda", Quarterly Journal of Economics 124, no. 2: 735-69, 2009.
  • ^ Mary Robinson’s definition, in the OECD Survey on Monitoring The Paris Declaration, 2008.
  • ^ See Kharas, H., "Transparency: Changing the Accountability Engagement, and Effectiveness of Aid", in: Kharas, H., Makino, K., Jung, W., "Catalyzing Development", Brookings Institution Press, Washington, D.C. 2011.
  • ^ Majone, G. "The new European Agencies: regulation by information", Journal of European Public Policy 4, no. 2: 262-75, 1997.
  • ^ See, for example, Pranay, S., and Hubbard, M., "A Future for Aid Data: Research towards a South-South Cooperation Data Categorization to complement on-going IATI Categorizations’", ongoing research, DFID Future of Aid and Beyond Research Competition 2010-11, 2011.
  • ^ Kharas, H., Makino, K., Jung, W., "Catalyzing Development", Brookings Institution Press, Washington, D.C. 2011.
  • ^ See Droop, J., Isenman, P., and Mlalazi, B., "Mutual accountability in Aid Effectiveness: International-Level Mechanisms", Briefing Note, n.3, Oxford Policy Management, 2008.
  • External links


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