Documente Academic
Documente Profesional
Documente Cultură
Homi Kharas
The Brookings Global Economy and Development
working paper series also includes the following titles:
Author’s Note:
Excellent research assistance was provided by Joshua Hermias and Stephanie Brewer.
CONTENTS
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Aid trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Net aid flows—the aggregates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Net aid transfers into country programmable aid (CPA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Destination of aid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Net aid flows—multilateral agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Non-DAC aid donors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Private aid donors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Aid Architecture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Changes in aid architecture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
TRENDS AND ISSUES IN
DEVELOPMENT AID
Homi Kharas
• Sub-Saharan Africa is especially hard hit by this • There is a growing need for efficient allocation rules
wedge between ODA and CPA. It only received $12.1 for donors to fund the growing number of aid agen-
billion in CPA in 2005, showing almost no increase cies, but assessments of aid agency effectiveness is
over the preceding two decades. in its infancy.
• Non-DAC bilateral assistance (NDBA) is growing • Scaling up, learning and innovation could advance
rapidly and amounts to more than $8 billion in ODA as new players experiment with new methods, but
and $5 billion annually in CPA. would require more public and private sector ex-
changes.
• Private aid (PrA) from DAC member countries might
already contribute between $58-68 billion per year,
although aggregate data is sketchy.
Multilateral
Institutions
signed. They therefore operate to directly strengthen opment concerns in the allocation of funds across
two parts of the aid channel: the transfer of funds countries,3 and for failing to deliver results in many
from donor governments to recipient governments, cases. These trends have stoked skepticism about
and the design and implementation of good programs the effectiveness of official aid. They also undermine
and projects in recipient countries providing develop- the ability of rich country governments to mobilize
ment benefits to the poor. new funds for development: contemporary increases
in ODA are leveraged from special use funds (which
This system is now under severe strain. On the supply generally flow back to rich countries) and not from
side, there has been an explosion of bilateral and mul- increases in real resource transfers. In several rich
tilateral agencies, and multiple new private donors. countries, the willingness to have governments inter-
On the delivery side, the explosion has been even mediate foreign assistance has shrunk. Government,
more dramatic. While statistics about global numbers in both rich and poor countries, is seen by many as a
of NGOs are notoriously incomplete, it is currently source of problems rather than as a solution to prob-
estimated that there are somewhere between 6,000 lems of poverty.
2
and 30,000 national NGOs in developing countries.
With each additional player, the architecture becomes In response, the aid architecture is changing rapidly.
more complex. All of this dilutes the transaction and Citizens in rich countries are increasingly looking to
coordination cost savings of the old architecture and channel their funds through private organizations,
makes new solutions for efficient aid delivery difficult rather than through governments. Importantly, there
to implement. still appears to be a significant degree of support for
the concept of foreign aid among the world’s rich
Official aid channels are also facing sustained criti- countries. In a recent survey, 90 percent of respon-
cism for favoring political ends rather than devel- dents in France, Germany and Great Britain, and 84
100000
80000
60000
40000
20000
Source: OECD/DAC
peaking in 1991. Bilateral aid dominated this increase, increases earmarked for Africa. Actual aid flows have
but multilateral aid also rose modestly. This pattern responded to these commitments, and aid has risen
is consistent with bilateral, political interests being by more than 50 percent since Monterrey.
important in the determination of aid. Multilateral aid
did grow, especially in the late 1970’s, but at a modest At first blush, the trends in net aid seem to be consis-
rate: 4 percent annually between 1974 and 1991. For tent with donor commitments but the devil lies in the
obvious reasons, this period can be classified as an details, as shown below.
era of “Cold War” aid.
With the demise of the Soviet Union, aid flows dropped Net aid transfers into country
significantly for a decade, again largely driven by bi- programmable aid (CPA)
lateral flows. By 1997, aid had fallen by 22 percent Not all the funds counted as aid are actual flows that
from its high point, before recovering slightly thereaf- can be applied to development projects and programs
ter. This period of “aid fatigue” however was accompa- in poor countries. To measure country programmable
nied by a growing number of failed states and growing aid (CPA), we subtract from total aid the special purpose
poverty especially in sub-Saharan Africa. The UN led flows: administrative costs of aid agencies, humanitarian
an effort to achieve consensus around a number of and emergency relief, food aid, technical cooperation
development goals (the Millennium Development and debt relief (on private credits and non-aid official
Goals) which included targets for financial assistance financial flows). This is not to argue that these forms of
to support developing country efforts. In early 2002, assistance are unimportant or of no value. Rather it sim-
donors agreed, at a conference in Monterrey, that aid ply asserts that these kinds of transfers cannot be used
should be raised substantially. Since then, the G-8 has directly for development programs like building and
committed to doubling aid by 2010, and to significant maintaining schools, clinics and infrastructure.10
30000
20000
10000
This measure of development aid therefore includes These figures suggest that it has proven to be easier
specific investments, budget support, sector-wide to mobilize funds for non-project related purposes,
program support, and many other forms of project like technical assistance, debt relief, food aid and
and program mechanisms aimed at promoting devel- emergencies, than for real development projects and
opment. Figure 3 shows that net CPA, defined in this programs. By providing funds in this fashion, donors by-
way, is much lower than total net ODA, but has evolved pass the need to have well-designed and implemented
with a broadly similar pattern over time, until recently. development projects and have less need for multilat-
eral agencies to play a coordinating and technical role.
If DAC pledges for total aid increases are to
be realized, aid excluding debt relief will have
to increase by $45 billion by 2010. Looking forward, it is unlikely that aid increases can
continue to be expanded at the same rate through
Like ODA, CPA rose steadily until 1991, then fell sharply special purpose flows. Debt relief will not be required
through 1998 before starting to recover. But unlike at current levels in 2010, simply because there is less
ODA, CPA has not seen a major increase recently and and less debt eligible for relief. In 2005, debt relief
is only slightly higher today than it was twenty years was $25.4 billion (including the Paris Club’s extraor-
ago in 1985. If CPA to Iraq and Afghanistan is excluded dinary debt cancellation for Iraq and Nigeria) and
($6.4 billion in 2005), net CPA was lower in 2005 than accounted for nearly one-quarter of total ODA. But
in 1985 in absolute terms. The same pattern holds for debt relief is a limited instrument: 30 countries (of
bilaterals and multilaterals. Net CPA from multilateral which 25 are African) have participated in the Heavily
institutions has been almost stagnant for the last 20 Indebted Poor Countries (HIPC) Initiative; 22 of these
years (0.4 percent growth). The share of CPA in total countries have already reached their HIPC completion
aid has correspondingly fallen from 59 percent in 1975 points, indicating full and irrevocable disbursement of
to 37 percent in 2005. their relief package. These countries will not receive
SSA SSA
S. & Cen. Asia Mid East
Americas Unallocated
Unallocated S. & Cen. Asia
1985 2005
East Asia East Asia
Mid East Americas
Oceana Europe
Europe Oceana
any more funds in debt relief. The remaining eight Destination of aid
countries will all reach their completion points by
It is instructive to ask where the development aid ac-
2009 at the latest. So the majority of debt-relief un-
tually goes, and if there are any geographic trends in
der HIPC/MDRI is nearly finished: new disbursements
the data, especially considering the importance attrib-
by bilaterals of debt relief (including reimbursement
uted by many to a focus on sub-Saharan Africa (SSA).
to IDA and AfDB for MDRI) are not expected to exceed
The results are striking. Sub-Saharan Africa received
$4 billion in 2010.11
$32 billion in aid in 2005, but just $12.1 billion of this
was in the form of money available for development
The implications of debt relief shrinking from $25.4
programs, fractionally more than the $11.6 billion that
billion to $4 billion are significant. It suggests that
these countries got in 1985. The Middle East has re-
other modalities of aid will increase from $81 billion
ceived a much larger portion of total aid than in the
in 2005 to $126 billion in 2010, if the DAC pledges for
past, with $24 billion, of which $6.7 billion was for de-
total aid increases are realized.12 Of this additional $45
velopment projects (Figure 4). These figures compare
billion in other types of aid, excluding debt relief, one
very unfavorably with what one estimate calculates as
would hope that a majority would be devoted to proj-
“optimal” aid allocations which would give Africa two-
ects and programs in developing countries. But this
thirds, while giving almost nothing to middle income
would mean more than doubling funding for devel-
countries in the Middle East (or Latin America and
opment projects and programs because the current
Caribbean or East Asia).13
level of total disbursements of CPA is only $38 billion
per year. Simply put, there may not be enough good
Most of sub-Saharan Africa’s money for development
projects and programs in the pipeline to be able to
projects came from multilateral agencies ($7.9 billion).
disburse such a large increase.
They provided almost half their net development aid
28%
41% 41% 40% 36%
22% 21% 47%
to SSA. Bilaterals, by contrast, only gave $4.2 billion ingly large sums to the European Commission for de-
in development aid to SSA, one-third less than the velopment purposes. The EC is now the largest single
amount they gave in 1985. multilateral development aid agency, consistently
surpassing IDA since 1997. In 2005 the EC disbursed
$9.7 billion, or 40 percent of all multilateral aid, more
Net aid flows—multilateral agencies than IDA and all the regional development banks put
Multilateral aid has expanded steadily over time, dou- together ($8.5 billion).
bling in 30 years from $11.7 billion in 1975 to $22 billion
in 2005, or about one-fifth of total net ODA. The mul- The second trend is the emergence of new “vertical”
tilateral system traditionally has had two pillars. IDA funds such as the GFATM. This fund, in just four years
and other regional development banks have based since its inception, has grown to almost $1 billion in
their assistance on country programs, while the UN annual disbursements and is expected to continue to
system of specialized agencies has been used to pro- grow rapidly. Other specialized funds, like the Global
vide advice (and some funding) for specific sectoral Environment Facility and the Montreal Protocol have
themes. In 1995, IDA and regional banks accounted also increased in size. From negligible levels, these
for 47 percent of total multilateral aid. By 2005, this new funds now account for 7 percent of total multilat-
share had fallen to 36 percent. Meanwhile, the share eral aid or $1.8 billion in 2005.
of UN agencies in total multilateral aid fell even more
steeply: from 37 percent in 1985 to 25 percent in 1995 The pattern is similar when one considers net CPA
to 17 percent in 2005 (Figure 5). (Figure 6). As expected, the multilaterals disburse a
large fraction (over three-quarters) of their total aid
This trend is due to two new elements in multilateral in projects and programs. They provided $16.9 bil-
assistance. Members of the EU have provided increas- lion in such aid in 2005. The growing importance of
the EC and the vertical funds, which now account for meet pressing development needs, has created space
one-half the multilateral system, also comes through. that has been quickly taken over by two new groups of
What is more striking, however, is the decline in the players: non-DAC bilateral donors;14 and foundations,
share of IDA and the regional banks, from 57 percent NGOs, religious organizations and other types of pri-
of net multilateral CPA in 1995 to 36 percent in 2005. vate givers (private voluntary organizations or PVOs).
IDA and the regional banks tend to be the agencies Because these new groups have no formal place in the
with the closest relationships to country development aid architecture, they do not report their activities in
agencies, and tend to have the strongest field pres- the same way. Quantitative trends are hard to docu-
ence. The implication, therefore, is that the largest, ment, but the limited evidence that does exist sug-
fastest growing multilateral agencies (the vertical gests that amounts are rising dramatically.15
funds) are the least well equipped to share informa-
tion, coordinate with government programs in the Our best guess is that the non-DAC bilaterals con-
field and respond flexibly to new development de- tributed about $8 billion in total aid in 2005. Some
mands because they are specific-purpose and with countries do report to the DAC, including some Arab
centrally-designed and run programs. countries, Korea, Turkey and Chinese Taipei. To this
figure, we have added a reported $2-3 billion from
What is more striking, however, is the decline
China and $1 billion from India, as well as smaller
in the share of IDA and the regional banks,
amounts from countries like Thailand and Brazil.16
from 57 percent of net multilateral CPA in
1995 to 36 percent in 2005. Unlike traditional donors, the non-DAC bilaterals give
little in the form of emergency and food relief, debt
Non-DAC aid donors relief (as they have small outstanding liabilities) or
The mixed record of ODA, in terms of how much is technical cooperation (as the domestic consulting
actually delivered to poor country governments to industry is small). Correspondingly, a greater fraction
billion for official DAC CPA.22 But it seems reasonable new donors, but to simply point out that in terms of
to expect that these expenditures would be minor. CPA they are today of the same order of magnitude as
Firstly, the advocacy work done by private groups in official DAC member flows.
developed countries is already removed from the es-
timates of international giving. Private organizations Private aid is expanding rapidly. Estimates suggest
also have few high priced expatriates in the field and that about 18,000 NGOs have operations which span
do not engage in considerable studies and free-stand- across international borders. 24 Estimates for the
ing advisory projects in developing countries. Finally, United States suggest a fourfold increase in interna-
there are case studies showing that contractors to pri- tional giving in the 1990s, a pace which, if anything, is
vate NGOs charge a third of what equivalent experts accelerating further in the 2000s. European founda-
get paid by official agencies to work in developing tions have also expanded rapidly and by some mea-
23
countries. This all suggests that the amount spent by sures now exceed the total size of US foundations.
the private nonprofit sector on technical cooperation Foundation giving has been linked with stock market
is comparatively low. performance in rich countries, so the recent strength
in these markets augurs well for continued rapid
The point here is not to place any great credibility on short-term gains in private international giving.
the precise magnitude of the amounts given by these
$5.5
Technical Cooperation
$21 Vertical
Funds
Development Aid from official
donors (DAC and new bilaterals)
$25 $20
New corruption
Multilaterals
$10
project admin.
$38
capture by
$.5 rich citizens
taxes
Tech. Cooperation debt relief
$1.5
$105 $1.5 $6 interest on loans $19?
$.5
$2 emergency and humanitarian aid
interest on loans
$24.5
$63
Private Aid Organizations
$39
?
Development Aid and technical
$5 cooperation, from Private Aid
Organizations, including official
Rich Individuals administration and fundraising Poor Individuals
contributions
groups could now amount to $63 billion. An additional Zedillo Committee called for an incremental $50 bil-
$6 billion flows in from official agencies that use NGOs lion over 2001 levels (or about $115 billion per year);
to implement a variety of programs. A small portion the World Bank called for $90-140 billion per year in
of NGO funds are directed back to the official sector, incremental funds (or $150-200 billion per year); the
into public-private partnerships. Some funds ($5 bil- UN Millennium project called for $135 billion to fund
lion) also drain away into overhead and fundraising the MDGs.29 These amounts relate to what is needed
expenses. That leaves more than $63 billion to be at the project and program level: even combined, of-
disbursed by private aid groups, which takes the form ficial and private aid resources currently available fall
of emergency and humanitarian assistance (perhaps short of each of these estimates. But if resources can
$24.5 billion) and development project and program be partly increased and partly redeployed, then the
financing ($39 billion), roughly the same amount as amounts required could be made available. The chal-
the official sector gives for CPA. lenge then is to structure the system so that aid flows
through the most efficient organizations, to countries
Despite the considerable increases in private aid, it where need is greatest and capacity to program and
is safe to say that the amount of development aid implement projects is highest, and where develop-
being delivered falls far short of the estimates of ment concerns are pre-eminent.
“need.” Sachs estimates a need of $124 billion; the
• Results, effectiveness and aid allocation rules; Knack and Rahman (2004) show that there can be
substantial costs to donor fragmentation and to proj-
• Scaling up, learning and innovation.
ect proliferation in recipient countries.30 Their index of
donor fragmentation measures the number of small
Information sharing, coordination and aid donors per country. They show that this measure
planning has risen from 1975 onward. They also look at project
Perhaps the greatest impact of the exploding number proliferation. Roodman also reports that the number
of aid agencies is the growing difficulty of providing of development projects tripled between 1995 and
adequate information, coordination and planning for 2003.31 And in 2005, the OECD reported that there
effective development assistance. The basic mecha- were more than 60,000 active aid projects, with 85%
nism for information sharing and planning among dif- of these projects costing less than $1 million.32 Knack
ferent donors and between the donor community and and Rahman argue that fragmentation and project
recipient governments has long been Consultative proliferation reduce aid effectiveness and cause insti-
Group or UN Round Table meetings. These meetings tutional destruction: the poaching of scarce staff from
bring together, in one place and time, representatives key government positions, the by-passing of govern-
from key aid agencies and government officials. They ment structures and procedures, and the lack of gov-
discuss development projects and programs and the ernment ownership.
funds needed for implementation.
All Observations 0.52 0.41 0.38 0.30 0.35 0.28 0.26 0.22
All Observations,
excluding unallocated
disbursements 0.49 0.39 0.37 0.31 0.34 0.28 0.28 0.24
Income per capita
≥ $500 0.53 0.40 0.38 0.32 0.47 0.40 0.36 0.29
Income per capita
< $500 0.33 0.18 0.18 0.17 0.23 0.18 0.18 0.17
Sub-Saharan Africa 0.39 0.25 0.24 0.22 0.28 0.17 0.18 0.17
Oceania 0.82 0.63 0.61 0.59 0.89 0.73 0.70 0.62
Here we look anew at donor fragmentation. One mea- year. 33 This is regressed against the country’s per
sure of donor fragmentation, from the perspective of capita income; its population; a time trend; the volume
a recipient country, is the Herfindahl-Hirschman Index of aid per capita; and dummies for whether it is lo-
(HHI) of aid received by the country from different do- cated in Africa or Oceania. We run the model with and
nors. When applied to aid receipts, the HHI can be con- without well-known examples of “special case” aid
structed as the sum of the squared shares of aid from (Egypt, Iraq, Afghanistan). The results do not change
each donor. When there are a large number of small appreciably as the data set contains several thousand
donors, each donor’s share in total aid to a country is observations. We therefore only present the results
small, and the HHI is low. When aid is concentrated in with the full data set.
one or two donors, the HHI is relatively high.
All the coefficients are significant and of the expected
The results of constructing a HHI for aid are presented sign. Poorer countries tend to suffer from greater
in Table 3. The figures shown are weighted averages of fragmentation of aid. They deal with more donors. So
individual country HHI levels, with the weights being the do small countries. The time trend (year) in the re-
share of each country in the ODA of that group. They gression is also highly significant, indicating that frag-
show that the HHI is getting smaller over time (more mentation has increased substantially in recent times.
fragmentation); that it is smaller for Africa and larger for Countries with high aid per capita also tend to be less
Oceania; and that it is smaller for poorer countries. fragmented, partly because high aid per capita usu-
ally results from one dominant donor providing sub-
These trends can be formalized in a regression model stantial resources. Sub-Saharan countries suffer from
(Table 4). The HHI measure of aid fragmentation can markedly greater aid fragmentation, while Pacific
be constructed for each recipient country for every Island countries have markedly less fragmentation.
The unfortunate conclusion is that the countries expe- A number of proposals to reduce these problems
riencing the greatest amount of fragmentation—small, are being implemented. The Development Gateway
poor, African states with relatively modest amounts of Foundation has a technological platform, the Aid
aid—are precisely those countries most in need of bet- Management Platform, that is designed for use by
ter coordination by donors. governments and their development partners. This is
a good step forward on the sharing of information, but
The issue of fragmentation might be even more se- is not yet used fully as a vehicle for discussing priori-
vere than that suggested by the analysis above be- ties and promoting an effective division of labor across
cause there has also been a proliferation of agencies donors. The Development Gateway also does not have
within donor countries, while we have assumed each information on many private sector aid activities.
donor country to be a single entity. To manage this is-
sue, some donors, like Australia, have moved towards The Paris Declaration on Aid Effectiveness, endorsed
a whole-of-government approach to coordinate their by 100 agencies in March 2005, seeks to reduce over-
agencies. Others, like the UK, have moved towards lap among donors. The Paris Declaration calls for aid
greater clarity on institutional responsibility, with Dfid to be responsive to national development strategies,
taking the lead role in development matters but shed- use national systems for procurement and financial
ding other bilateral concerns such as trade. The US management, give more funding under programmatic
system is particularly fragmented, although there is approaches and to be based on shared analytical un-
an effort now to have a coordination role played by derpinnings. Quantitative targets are laid out for spe-
a single department within State.34 One further layer cific indicators to be achieved by 2010, but monitoring
of fragmentation concerns the interaction between of progress towards the Paris Declaration has been
the official and private aid systems. Little can be said hard to implement, and only a few case studies and sur-
about this in quantitative terms, but it is clear from veys are underway. Furthermore, the Paris Declaration
anecdotal evidence that this is a severe issue in some does not engage the new bilaterals or private organiza-
sectors (notably health) in some countries. tions. Thus it focuses on the traditional aid architecture
at the expense of the most dynamic part of aid flows.
of the excess volatility of aid. The simple average of “mergers, acquisitions, or exits” of international agen-
this measure across all countries is shown in Table 6. cies appear to be politically too hard to consider, the
Table 6 shows that both total aid and CPA are much allocation of official funds becomes the most impor-
more volatile than national income. It also shows that tant signal of perceived effectiveness.
volatility has risen since 1990, compared to the two
preceding decades. An initial step towards tracking official aid agency
performance has been made in the Multilateral
Results, and attribution to specific agencies, should be Organization Performance Assessment Network
a critical element in the allocation rule for a bilateral (MOPAN), a grouping of nine donor countries that
donor. An efficient aid allocation system would be one jointly conduct an annual in-house survey of multi-
where more effective agencies receive greater alloca- lateral partnership behavior in developing countries
tions, while contributions to less effective agencies (partnerships with national governments, civil soci-
are reduced over time. Especially in a system where ety and other bilateral and multilateral development
agencies). The survey is based on the perceptions of instruments. These reviews include bilateral agencies.
MOPAN member embassies or country offices, arising The focus, however, is exclusively towards pro-poor
from their day-to-day contacts with multilateral orga- financial services.
nizations. The MOPAN Annual Survey is not an evalu-
ation and does not cover actual results on the ground. The peer review mechanism of the OECD/DAC is an-
It does, however, show the demand for assessing aid other forum for sharing experiences across aid agen-
agency performance.35 cies. As each review is done by a different agency,
there is no systematic process that permits compara-
The UK DFID has a Multilateral Effectiveness Frame- ble treatment across agencies being reviewed. It also
work initiative, to look at the efficiency of multilateral does not cover all types of agencies.
institutions. Along with other country program evalu-
ations, these efforts have a focus on the nature of the Despite this knowledge and evaluation gap as to
internal evaluation systems within each agency, and agency effectiveness, donors today have a pressing
the professionalism and credibility of that and other practical need: they must choose how to allocate their
management systems. scarce official development assistance among an ever-
growing array of multilateral institutions, global funds
The Consultative Group to Assist the Poor (CGAP) and programs, bilateral agencies and NGO groups.
has also undertaken several Microfinance Donor peer
reviews, for 17 agencies, focused on what donors can The literature on aid allocation finds that aid flows
do to improve their own processes in increasing aid ef- respond to donor “self-interest” (as proxied by com-
fectiveness. The assessment is done against five core mercial flows between countries such as trade, geo-
elements of effectiveness: strategic clarity and coher- graphic links like colonial ties, or political factors such
ence; strong staff capacity; accountability for results; as common voting patterns in the United Nations), as
relevant knowledge management; and appropriate well as to recipient need (proxied by per capita GDP
25. These figures have a wide range: IDA estimates 35. MOPAN members are: Austria, Canada, Denmark,
over 230 international organizations, funds and Finland, Netherlands, Norway, Sweden, Switzer-
programs. IDA 15, Aid Architecture: An Overview land, UK. Three agencies are reviewed each year,
of the Main Trends in Official Development Assis- including AfDB, ADB, FAO, ILO, UNAIDS, UNDP,
tance Flows (IDA, February 2007). UNFPA, UNICEF, and the World Bank.
26. Duke University Non-Governmental Organiza- 36. See for example, Jean-Claude Berthelemy, “Aid
tions Research Guide estimates between 6,000 to Allocation: Comparing Donors’ Behaviours” Swed-
30,000 national NGOs in development. ish Economic Policy Review (2006); or Bobba and
Powell, “Aid and growth: Politics Matters” (IADB
27. For example, almost every aid project has a sepa-
mimeo, January 2007).
rate Project management unit to administer the
project. Some anecdotal stories suggest that 37. One cannot of course infer that the HIV programs
around 50 percent of funds actually reach the caused the deterioration in other health outcomes.
targeted beneficiaries. But this example does serve to remind that the broad
development outcome (better health) can move in
28. Private giving from rich individuals in poor coun-
different ways from more narrowly defined interme-
tries will likely be a trend of the future. Proof of this
diate indicators. See Laurie Garrett, “The Challenge
potential can be found, for example, in the world’s
of Global Health,” Foreign Affairs (Jan/Feb 2007).
wealthiest individual, Carlos Slim Helú of Mexico,
who has made clear his interest in philanthropy. 38. S. Levy, Progress Against Poverty (Washington,
However, there is little evidence at this point that D.C.: Brookings Institution, 2007).
rich individuals in poor countries disburse their
39. Based on preliminary research carried out by Uma
gifts to countries other than their own.
Lele for the Wolfensohn Center in 2006
29. J. Sachs, An End to Global Poverty (New York:
40. S. Ahmed and M. French, “Scaling Up: the BRAC
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ISSN: 1939-9383