Rhetoric versus Reality: The Best and Worst of Aid Agency Practices

Abstract

Foreign aid critics, supporters, recipients and donors have produced eloquent rhetoric on the need for better aid practices -has this translated into reality? This paper attempts to monitor the best and worst of aid practices among bilateral, multilateral, and UN agencies. We create aid practice measures based on aid transparency, specialization, selectivity, ineffective aid channels and overhead costs. We rate donor agencies from best to worst on aid practices. We find that the UK does well among bilateral agencies, the US is below average, and Scandinavian donors do surprisingly poorly. The biggest difference is between the UN agencies, who mostly rank in the bottom half of donors, and everyone else. Average performance of all agencies on transparency, fragmentation, and selectivity is still very poor. The paper also assesses trends in best practices over time -we find modest improvement in transparency and more in moving away from ineffective channels. However, we find no evidence of improvements (and partial evidence of worsening) in specialization, fragmentation, and selectivity, despite escalating rhetoric to the contrary.

Aid Fragmentation or Aid Pluralism? The Effect of Multiple Donors on Child Survival in Developing Countries, 1990–2010

“…It is remarkable that all main indices and rankings of the "quality" of development assistance penalize donors for contributing to multiplicity (Birdsall, Kharas, Mahgoub, & Perakis, 2010;Easterly & Williamson, 2011;Knack, Halsey Rogers, & Eubank, 2010). Easterly and Williamson (2011) acknowledge that complete specialization by country or sector is not necessarily optimal, but nonetheless their index assumes a linear negative relationship between contribution to fragmentation and donor performance. They justify this assumption by arguing that most of their observations are at a high level of fragmentation that plausibly corresponds to suboptimal behavior.…”

Political Conditionality and Foreign Aid

“…At the same time, the 'heterogeneity of donors' is remarkable. Differences between donors loom large in terms of the degree and the specific criteria of aid selectivity used (e.g., Alesina & Dollar, 2000;Easterly & Williamson 2011;Hout, 2007;McGillivray, 2003;Neumayer, 2003;Clist, 2011). In general terms, the 4Ps (poverty, population, policies, and proximity) matter for the donor (Clist, 2011) but the extent to which political criteria (regime issues recipient) enter into allocation decisions is unclear.…”

The politics of energy and development: Aid diversification in the Philippines

“…Despite these calls empirical studies show that donors largely fail to achieve their target to reduce fragmentation [5,40]. Easterly and Williamson [21] cannot detect improvements "despite escalating rhetoric" (p. 1930).…”