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On Planning for Development:    Aid                                                         Editor: Dr. Róbinson Rojas Sandford
From ReCom - Research and Communication on Foreign Aid

Aid in a Post-2015 World
UNU-WIDER summary and overview - 27 May 2014

Abstract: The ReCom – Research and Communication on Foreign Aid – programme produced 247 original studies. More than 300 researchers from 59 countries came together and provided evidence on what does and could work in development, and what can be transferred and scaled up. ReCom’s five thematic areas are summarized in comprehensive Position Papers on: Aid, Growth and Employment, Aid and the Social Sectors; Aid and Gender Equality; Aid, Governance and Fragility; and Aid, Environment and Climate Change. ReCom research was communicated and tested in seven international Results Meetings, 83 seminar and conference presentations across the world, and an impressive series of academic outlets. The ReCom website provides access to working papers, videos and research summaries. Together this material offers an unprecedented insight into what moves societies forward, what achieves change, and what aid can and does achieve.
Following the guidelines established at the outset, ReCom research was not meant to simply compile small ‘best practice’ projects, hoping that these might add up to systematic large scale impact. Instead the focus has been on synthesizing what aid has produced in terms of outputs and outcomes and on contributing to systematic thinking and reflection with a view to improving existing knowledge about development assistance. An old saying suggests that success is not doing extraordinary things – but doing ordinary things extraordinarily well. High impact aid is associated with doing many ordinary things, but also with doing the extraordinary, in less than ideal circumstances. In aid’s daily practice, context, political acumen and sequencing are indispensable to complement technical proficiency and expert identification of needs. As we approach 2015, the task of achieving and sustaining large-scale impact – ‘going to scale’ – stands out as aid’s greatest challenge.

United Nations University
World Institute for Development Economic Reseach:
From UNU-WIDER working papers series 2010
Tony Addison, Channing Arndt, and Finn Tarp
The Triple Crisis and the Global Aid Architecture

The global economy is passing through a period of profound change. The immediate concern is with the financial crisis, originating in the North. The South is affected via reduced demand and lower prices for their exports, reduced private financial flows, and falling remittances. This is the first crisis. Simultaneously, climate change remains unchecked, with the growth in greenhouse gas emissions exceeding previous estimates. This is the second crisis. Finally, malnutrition and hunger are on the rise, propelled by the recent inflation in global food prices. This constitutes the third crisis. These three crises interact to undermine the prosperity of present and future generations. Each has implications for international aid and underline the need for concerted action.

The Paris Declaration on Aid Effectiveness (2005)
and the
Accra Agenda for Action (2008)

1. We, Ministers of developed and developing countries responsible for promoting development and Heads of multilateral and bilateral development institutions, meeting in Paris on 2 March 2005, resolve to take far-reaching and monitorable actions to reform the ways we deliver and manage aid as we look ahead to the UN five-year review of the Millennium Declaration and the Millennium Development Goals (MDGs) later this year. As in Monterrey, we recognise that while the volumes of aid and other development resources must increase to achieve these goals, aid effectiveness must increase significantly as well to support partner country efforts to strengthen governance and improve development performance. This will be all the more important if existing and new bilateral and multilateral initiatives lead to significant further increases in aid.
2. At this High-Level Forum on Aid Effectiveness, we followed up on the Declaration adopted at the High-Level Forum on Harmonisation in Rome (February 2003) and the core principles put forward at the Marrakech Roundtable on Managing for Development Results (February 2004) because we believe they will increase the impact aid has in reducing poverty and inequality, increasing growth, building capacity and accelerating achievement of the MDGs.

Center for Global Development - Paper Number 167 - March 2009
The End of ODA:
Death and Rebirth of a Global Public Policy

Jean-Michel Severino and Olivier Ray

The world of international development assistance is undergoing three concomitant revolutions, which concur to the emergence of a truly global policy. First, it is living through a diversification of the goals it is asked to pursue: to its traditional objective of ushering convergence between less and more developed economies have progressively been adjoined those of financing access to essential services and protecting global public goods. Secondly, faced with this new array of challenges, the world of development aid has demonstrated an impressive capacity to increase the number and diversity of its players, generating a governance conundrum for this eminently fragmented global policy. Thirdly, the instruments used by this expanding array of actors to achieve a broader range of policy objectives have themselves mushroomed, in the wake of innovations in mainstream financial markets. Yet surprisingly, this triple revolution in goals, actors and tools has not yet impacted the way we measure both the financial volumes dedicated to this emerging global policy nor the concrete impacts it aims to achieve. This paper argues for the need to move from the conventional measure of Official Development Assistance to the construction of clearer benchmarks for what ultimately matters: resources and results that concur to 21st century international development.

From DFID - Department for International Development

Bilateral and Multilateral Aid Reviews

On 1 March 2011, the Secretary of State for International Development, Andrew Mitchell outlined the findings of both the Multilateral and Bilateral Aid Reviews.

RP2004/44 Peter Burnell:
Foreign Aid Resurgent: New Spirit or Old Hangover?
(PDF 199KB)
This study is premised on the view that reports circulating in the 1990s, claiming foreign aid was in terminal crisis, were premature. Aid’s reviving fortunes are explained in terms both of a growing awareness of the uneven implications of globalization and the after-effects of the terrorist events of 11 September 2001. However these two ‘drivers’ make uneasy partners. Furthermore, aid for democratization, argued in the 1990s to be an instrument for indirectly addressing socioeconomic weakness and improving development aid’s effectiveness—making it a positive feature in a bleak decade—is increasingly seen as problematic. For now, aid’s resurgence should target pro-poor development rather than democratic reform, although the likelihood is that old fashioned determinants of realpolitik will continue to get in the way.

RP2005/54 Mark McGillivray, Simon Feeny, Niels Hermes and Robert Lensink:
It Works; It Doesn’t; It Can, But That Depends…: 50 Years of Controversy over the Macroeconomic Impact of Development Aid
(PDF 254KB)
This paper surveys 50 years of empirical research on the macroeconomic impact of aid, looking mainly at studies examining the link between aid and growth. It argues that studies dating until the late 1990s produced either contradictory or inconclusive results. Aid either worked, or it didn’t, according to this research. The paper then highlights a major shift in the literature that coincided with the release of the World Bank’s Assessing Aid: What Works, What Doesn’t and Why. Practically all research published since that report agrees with its general finding that aid works, to the extent that in its absence growth would be lower. One controversy may therefore have been settled. Yet, we show, the report has set-off an intense debate over the context in which aid works. That debate centres on whether the effectiveness of these inflows depends on the policy regime of recipient countries. Some possible avenues through which the heat might be taken out of this debate are considered.

DP2003/03 Jeffery I. Round and Matthew Odedokun:
Aid Effort and its Determinants
(PDF 238KB)
The paper empirically explores the factors that could have accounted for the generally declining aid effort (defined as the generosity ratio, or the share of GDP given as aid) of bilateral donors over the last three decades. Annual panel data over 1970-2000 period for the 22 DAC members are used in a series of regressions. The findings suggest the existence of progressivity of aid in relation to donor income. There is also evidence of the economies of scale, in the sense that the share of aid in income decreases with growth in the size of donor country population. Domestic pro-poor tendency also appears to enhance donor generosity, and a positive ‘peer pressure’ effect is also observed. In addition, the extent of military adventurism of the donor is observed to have enhanced aid effort, just as also the size of government. But no discernible effect is detected for fiscal balance. On the political front, a greater number of checks and balances in the political system as well as the existence of polarization and fractionalization within the government are found to have enhanced aid effort while fractionalization within the opposition has the opposite effect. On the other hand, no discernible and consistent effect of ideological orientation of government is detected. Finally, the movement in the aid effort over time is found to differ between the G7 and non-G7 donors.

DP2003/05 Simon Feeny:
What Determines Foreign Aid to Papua New Guinea? An Inter-temporal Model of Aid Allocation (PDF 283KB)

DP2003/09 Stefan Dercon and Pramila Krishnan:
Food Aid and Informal Insurance
(PDF 345KB)

Households in developing countries use a variety of informal mechanisms to cope with risk, including mutual support and risk-sharing. These mechanisms cannot avoid that they remain vulnerable to shocks. Public programs in the form of food aid distribution and food-for-work programs are meant to protect vulnerable households from consumption and nutrition downturns by providing a safety net. In this paper we look into the extent to which food aid helps to smooth consumption by reducing the impact of negative shocks, taking into account informal risk-sharing arrangements. Using panel data from Ethiopia, we find that despite relatively poor targeting of the food aid, the programs contribute to better consumption outcomes, largely via intra-village risk sharing.

DP2003/11 George Mavrotas and Bazoumana Ouattara:
The Composition of Aid and the Fiscal Sector in an Aid-Recipient Economy: A Model
(PDF 184KB)

DP2003/15 George Mavrotas and Bazoumana Ouattara:
Aid Disaggregation, Endogenous Aid and the Public Sector in Aid-Recipient Economies: Evidence from Côte d’Ivoire (PDF 252KB)

DP2003/17 Tony Addison, Mark McGillivray and Matthew Odedokun:
Donor Funding of Multilateral Aid Agencies: Determining Factors and Revealed Burden Sharing
(PDF 247KB)

DP2003/21 Mark McGillivray:
Descriptive and Prescriptive Analyses of Aid Allocation: Approaches, Issues and Consequences
(PDF 264KB)

DP2003/26 Matthew Odedokun:
Analysis of Deviations and Delays in Aid Disbursements
(PDF 280KB)

DP2003/33 Mark McGillivray and Bazoumana Ouattara:
Aid, Debt Burden and Government Fiscal Behaviour: A New Model Applied to Côte d’Ivoire (PDF 191KB)

DP2003/49 Mark McGillivray:

Modelling Aid Allocation: Issues, Approaches and Results
(PDF 240KB)

DP2003/71 Mark McGillivray:
Aid Effectiveness and Selectivity: Integrating Multiple Objectives into Aid Allocations
(PDF 165KB)

DP2003/82 John Micklewright and Anna Wright:
Private Donations for International Development
(PDF 229KB)

DP2003/85 George Mavrotas:
Which Types of Aid Have the Most Impact?
(PDF 182KB)

DP2005/06 David Fielding and George Mavrotas:
The Volatility of Aid
(PDF 173KB)

RP2005/61 Robert Osei, Oliver Morrissey, and Tim Lloyd: The Fiscal Effects of Aid in Ghana (PDF 191KB)

RP2005/60 Karuna Gomanee, Sourafel Girma, and Oliver Morrissey:
Aid and Growth in Sub-Saharan Africa: Accounting for Transmission Mechanisms (PDF 137KB)

RP2005/58 Peter Quartey: Innovative Ways of Making Aid Effective in Ghana: Tied Aid versus Direct Budgetary Support (PDF 105KB)

RP2005/49 J. Andrew Grant: Diamonds, Foreign Aid, and the Uncertain Prospects for Post-Conflict Reconstruction in Sierra Leone (PDF 106KB)

DP2006/02 George Mavrotas and Espen Villanger:
Multilateral Aid Agencies and Strategic Donor Behaviour
(PDF 174KB)

DP2006/01 Mark McGillivray:
Aid Allocation and Fragile States
(PDF 178KB)

RP2006/62 Marcia E. Greenberg and Elaine Zuckerman:
The Gender Dimensions of Post-Conflict Reconstruction: The Challenges in Development Aid
(PDF 126KB)

RP2006/23 David Fielding, Mark McGillivray, and Sebastian Torres:
A Wider Approach to Aid Effectiveness: Correlated Impacts on Health, Wealth, Fertility and Education
(PDF 180KB)

RP2006/07 Alessia Isopi and George Mavrotas:
Aid Allocation and Aid Effectiveness: An Empirical Analysis
(PDF 301KB)

RP2006/06 Gil S. Epstein and Ira N. Gang:
Decentralizing Aid with Interested Parties
(PDF 219KB)

RP2006/05 Jan-Erik Antipin and George Mavrotas:
On the Empirics of Aid and Growth: A Fresh Look
(PDF 254KB)

RP2006/04 David Roodman:
Aid Project Proliferation and Absorptive Capacity
(PDF 339KB)

RP2005/54 Mark McGillivray, Simon Feeny, Niels Hermes and Robert Lensink:
It Works; It Doesn’t; It Can, But That Depends…: 50 Years of Controversy over the Macroeconomic Impact of Development Aid
(PDF 254KB)

RP2005/09 Tony Addison, George Mavrotas and Mark McGillivray:
Aid, Debt Relief and New Sources of Finance for Meeting the Millennium Development Goals
(PDF 129KB)

RP2004/46 Renu Kohli:
The Transition from Official Aid to Private Capital Flows. Implications for a Developing Country
(PDF 257KB)

RP2004/45 Anthony Clunies-Ross:
Imminent Prospects for Additional Finance: What Might Be Done Now or Soon and Under What Conditions
(PDF 186KB)

RP2005/23 Tony Addison, George Mavrotas, and Mark McGillivray:
Development Assistance and Development Finance: Evidence and Global Policy Agendas
(PDF 202KB)

RP2005/09 Tony Addison, George Mavrotas and Mark McGillivray:
Aid, Debt Relief and New Sources of Finance for Meeting the Millennium Development Goals
(PDF 129KB)

Related themes:
- Inequality/social exclusion
- Poverty
- Informal sector
- Microfinance
- Aid
Complete list of development themes
Aid and Growth in Fragile States
Mark McGillivray and Simon Feeny - 2008
The literature on aid has come a long way in recent years, and as a result we now know much more about aid effectiveness than possibly ever before. But significant gaps in knowledge remain. One such gap is the effectiveness of aid in the so-called ‘fragile states’, countries with critically low policy and institutional performance ratings. The current paper addresses this void by examining possible links between aid and economic growth in fragile states. It finds that: (i) growth would have been 1.4 percentage points lower in highly fragile states in the absence of aid to them, compared to 2.5 percentage points in other countries; (ii) highly fragile states from a per capita income growth perspective can only efficiently absorb approximately one-third of the amounts of aid that other countries can, and; (iii) while from the same perspective most fragile states are under-aided, to the extent that they could efficiently absorb greater amounts of aid than they currently receive, many of the highly fragile states are substantially over-aided in this sense. The overall conclusion is that donors need to look very closely at their aid to the sub-set of fragile states deemed in this paper as highly fragile.

Enhancing Effective Utilization of Aid in Fragile States
Sanjeev Gupta - 2008
This paper explores the macroeconomic implications of aid flows in countries with weak institutions. It argues that these countries should take into account their overall macroeconomic position, their capacity to absorb aid at the sectoral and subnational levels, and the strength of their fiscal institutions in deciding how much and how fast to spend aid. These considerations may warrant a gradual use of aid, except when aid is provided for humanitarian purposes. There is some basis for frontloading spending for countries emerging from a conflict, otherwise fragile states should seek to smoothen their spending against the background of aid volatility and uncertainty.

Finance and Development - December 2006
Making Aid Work.
The end of the cold war and progress toward a new aid architecture should make aid more effective.
By Mark Sundberg and Alan Gelb
Since 1960 nearly $650 billion in aid (in 2004 prices) has been provided to sub-Saharan African (SSA) countries by the OECD Development Assistance Committee (DAC) countries. And this number would be even higher if contributions from emerging non-DAC donors, such as China, India, and some of the Gulf states, were added to the total. Has all this aid been gainfully used to promote sustainable growth and development? This is difficult to answer because the links between foreign aid and countries' development are complex. However, the likely answer is, on the whole, "No." Historically, most aid has not been used very well. Much of it was never intended for development to begin with, and a large share went to war-torn and politically unstable countries where development gains have subsequently been lost. However, there is good reason to believe that substantive changes are taking place and that "more and better aid" is now going to finance development programs.
From Finance and Development - September 2005
Can more aid really make poverty history as aid campaigners have argued?
This issue examines aid effectiveness and how to build momentum toward the Millennium Development Goals after the G8 vowed to double aid to Africa. Includes assessments of use of aid in Ethiopia, Ghana, Mozambique, Tanzania, and Uganda, as well as viewpoints from Burkina Faso, Tanzania, and the UK. Other articles look at next steps for reform in China, and how trading partners can help each other's growth. Profile of Jagdish Bhagwati and IMF Economic Counsellor Raghuram Rajan examines global financial risk. Also a look at governance and measures to combat corruption.
US Congressional Research Service - New York University
China's foreign aid activities in Africa, Latin America, and Southeast Asia
T. Lum, H. Fisher,J. Gomez-Granger, and A. Leland - February 25, 2009

In the past several years, the People’s Republic of China (PRC) has bolstered its diplomatic presence and garnered international goodwill through its financing of infrastructure and natural resource development projects, assistance in the carrying out of such projects, and large economic investments in many developing countries. This report examines China’s economic impact in three regions — Africa, Latin America (Western Hemisphere), and Southeast Asia — with an emphasis on bilateral foreign assistance.
China’s foreign aid is difficult to quantify. The PRC government does not release or explain Chinese foreign aid statistics and much of PRC foreign aid does not appear to be accounted for in the scholarly literature on foreign aid. Some Chinese foreign assistance partially resembles official development assistance (ODA) as defined by the Organization for Economic Co-operation and Development (OECD), but in other aspects shares characteristics of foreign investment. In terms of development grants, the primary form of assistance provided by major OECD countries, China is a relatively small source of global aid. However, when China’s concessional loans and state-sponsored or subsidized overseas investments are included, the PRC becomes a major source of foreign aid .

Measuring China’s Foreign Aid
China’s Foreign Aid Impact
Major Findings of the NYU Wagner School Study
Regional Highlights
Latin America
Southeast Asia

Figure 1. Reported PRC Aid by Year and Region, 2003-2007
Figure 2. Reported PRC Foreign Aid by Funding Source

Table 1. Similarities and Differences between OECD-Defined “ Official Development Assistance” (ODA) and “Chinese Aid ”
Table 2. Reported PRC Aid by Year, 2002-2007
Table 3. Reported PRC Aid by Funding Source and Region, 2002-2007
Table 4. Reported PRC Aid by Year and Region, 2002-2007
Table 5. Reported PRC Aid by Type and Region, 2002-2007
Table 6. Selected African Countries with Large Reported Aid and Investment Projects, 2002-2007
Table 7. Selected Major PRC Financing and Aid-Related Economic Projects in Africa
Table 8. Selected Latin American Countries with Large Reported Aid and Investment Projects, 2002-2007
Table 9. Selected Major PRC Financing and Aid-Related Economic Projects in Latin America
Table 10. Selected Southeast Asian Countries with Large Reported Aid and Investment Projects, 2002-2007
Table 11. Selected Major PRC Financing and Aid-Related Economic Projects in Southeast Asia
Table A-1. Selected PRC Aid and Investment Projects in 2008 (Announced or Begun): Africa
Table A-2. Selected PRC Aid and Investment Projects in 2008 (Announced or Begun): Latin America
Table A-3. Selected PRC Aid and Investment Projects in 2008 (Announced or Begun): Southeast Asia

Appendix. Recent PRC Foreign Assistance and Investment Projects (2008)
Author Contact Information

From Center for Global Development
The Chinese Aid System
By Carol Lancaster
June 2007
China has become a major source of foreign aid in Asia, Latin America and especially in Africa. Chinese aid has become a source of concern to Western aid agencies - will Chinese aid discourage needed economic and political reforms in African countries? Will it burden poor countries with debt -a burden from which many have only just escaped with the debt cancellation policies adopted by many aid agencies? This CGD Essay explores questions about Chinese aid - how large it is and how fast it is growing; how decisions are made on how much aid is provided each year; which countries receive it and how much they get; how the aid is managed within the Chinese government and how it is evaluated. The Chinese are clearly set to play a major role in aid-giving worldwide, and the aid-giving governments of Europe, North American and Japan should expand lines of communication and, to the extent possible, collaboration with the Chinese.


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Complete list of planning for development themes