Aid effectiveness, or the effectiveness of development aid, is of vital importance to the recipients of aid by enabling economic and human development, as well as to donors who are interested in increasing the impact of their funding in aid.
Aid effectiveness, or the effectiveness of development aid, is of vital importance to the recipients of aid by enabling economic and human development, as well as to donors who are interested in increasing the impact of their funding in aid.
There is no simple answer about what makes aid effective. However, some measures to improve the effectiveness of aid include:
Aid effectiveness is the degree of success or failure of international aid (development aid or humanitarian 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, and 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, around four high level forums on aid effectiveness were held to elaborate a set of good practices concerning aid administration co-ordination and relations between donors and recipient countries. The Paris Declaration and other results of these forums embodied a broad consensus on what needed to be done to produce better development results. From 2011 this movement was subsumed in one concerned more broadly with effective development co-operation, largely embodied by the Global Partnership for Effective Development Co-operation.
The modern foreign aid system began when the United States helped to rebuild Europe through the Marshall Plan.W From the 1960s to the 1980s, foreign aid was often used to support client states of the US and the Soviet Union, which of course compromised the integrity and the development goals of the aid. When the Cold War finished, the stated aims of such aid were refocused on reducing poverty and boosting development. Donor governments and aid agencies began to cooperate with each other and with developing countries, to improve their impact.
The Monterrey ConsensusW agreed on increased funding for development, while acknowledging that the amount of money was not enough - it was essential that the money be used effectively.
Some argue that aid is never effective - Dambisa MoyoW has achieved prominence by arguing this (or appearing to argue it, as presented in the media). Most critics, however - even harsh critics such as William EasterlyW - acknowledge that there are examples of effective aid.
Overall, there is widespread agreement that:
The OECD has explored, through its Development Assistance CommitteeW (DAC), why aid has and has not worked in the past. This has resulted in a body of best practices and principles that can be applied globally to make aid work better.
The Micro-Macro Paradox is that some researchers (Paul Moseley and others) consider that it is impossible to find a significant correlation between aid and growth rate of GNP, and yet at a micro level, all donor agencies regularly report the success of most of their projects and programs. Possible explanations and observations include:
Burnside and Dollar recently found that the impact of aid on growth is positive in countries with a good political environment for making policy. This is indicated by a significant and positive coefficient on the 'aid' policy interaction in the growth regression. As a result they advocate selectivity in aid allocation. (See also Governance as a condition of aid.) The difficulty is that this then excludes countries that are less fortunate in terms of policies and require help most. (One possible response is to focus on governance support for such countries - though this may be difficult if the aims of such programs conflict with the aims of those in power.) However, doubt has now been cast on their research and conclusions, in particular by William EasterlyW and his colleagues, who re-estimated the Burnside & Dollar model with updated and extended data, but could not find a significant aid-policy interaction term.
One problem in these studies on aid is that they typically combine different types of aid without distinguishing them.[verification needed] It would be expected that some type of aids such as short term aid do not have an impact on economic growth while other aids used for infrastructure and investments will result in a positive economic growth.
The intergovernmental Accra Agenda for Action (AAA) is a joint ministerial statement developed with support from the OECD’s Working Party on Aid Effectiveness. The AAA identifies three main areas where progress towards reform is still too slow.
The Accra Agenda for Action sets out a list of commitments for its signatories, building on those already agreed in the Paris Declaration. It asks the OECD’s Working Party on Aid Effectiveness to continue monitoring progress on implementing the Paris Declaration and the Accra Agenda for Action and to report back to the Fourth High Level Forum on Aid Effectiveness in December 2011. Many donor and recipient governments will have to make serious changes if the AAA’s aims are to be fulfilled. The fact that ministers have signed up to these changes in Accra makes the AAA a political document—rather than a technocratic prescription— to move from business as usual to a new way of working together.
In February 2005, the international community came together at the Paris High Level Forum on Aid Effectiveness, hosted by the French government and organised by the OECD. The role of aid in promoting development was attracting increasing public scrutiny in the run-up to the [Wikipedia:G8|G8 Summit]] in Gleneagles, Scotland, and the global campaigns such as Make Poverty History.
While some progress had been made in harmonising the work of the different international aid donors in developing countries, it was acknowledged that much more needed to be done. The aid process was still too strongly led by donor priorities and administered through donor channels, making it hard for developing countries to take the lead. Aid was still too uncoordinated, unpredictable and un-transparent. Deeper reform was felt to be essential if aid was to demonstrate its true potential in the effort to overcome poverty.
At the Paris meeting, more than 100 signatories—from donor and developing-country governments, multilateral donor agencies, regional development banks and international agencies—endorsed the Paris Declaration on Aid Effectiveness. The Paris Declaration went much further than previous agreements; it represented a broader consensus among the international community about how to make aid more effective. At its heart was the commitment to help developing-country governments formulate and implement their own national development plans, according to their own national priorities, using, wherever possible, their own planning and implementation systems.
The Paris Declaration contains 56 partnership commitments aimed at improving the effectiveness of aid. It lays out 12 indicators to provide a measurable and evidence-based way to track progress, and sets targets for 11 of the indicators to be met by 2010.
The Declaration is focused on five mutually reinforcing principles:
A first round of monitoring of the 12 Paris Declaration indicators was conducted in 2006 based on activities undertaken in 2005 in 34 countries. A second survey was organised in early 2008 in which 54 developing countries examined progress against the targets at country level. This 2008 Survey covers more than half all the official development assistance delivered in 2007—nearly USD 45 billion. It will be presented at the Third High Level Forum on Aid Effectiveness in Accra in September 2008. The evidence so far suggests that progress has been made. For example, more than one third of developing countries surveyed had improved their systems for managing public funds; almost 90% of donor countries had untied their aid; and technical cooperation is more in line with developing countries' own development programmes. Despite these improvements, however, the results of the Survey show that the pace of progress remains too slow to reach the targets set in 2010. In particular, although many countries have made significant efforts to strengthen their national systems (for instance by improving how they manage their public funds), in many cases donors are still reluctant to use them. The predictability of aid flows also remains low (with just over a third of aid disbursed on schedule), thereby making it hard—or impossible—for governments to plan ahead. In summary, whilst some progress has been made there are still many areas where the pace of change must be accelerated if the targets set for 2010 are to be reached.
In some quarters, the Paris Declaration is almost synonymous with aid effectiveness; it is expected that aid will be effective and achieve development outcomes when the principles are observed for government sector aid. However, there continue to be criticisms and alternative views, particularly from non-government aid organizations. Implementation of the Paris Declaration still needs to be significantly stepped up, according to the results of the 2008 Monitoring Survey. Concrete targets set for 2010 (such as an increased proportion of aid to be untied; establishment of "mutual accountability" mechanisms in aid recipient countries; and for two-thirds of aid to be delivered in the context of so-called programme approaches rather than projects) may be difficult to meet. Independent NGOs, such as Eurodad, also release their own evaluations, showing that the Declaration is not being implemented as planned. The Overseas Development InstituteW has specified that better monitoring of the relationship between the Paris Principles and development results at sector level is necessary.[1]
The Organisation for Economic Co-operation and DevelopmentW is the main coordinating body for the international community's efforts to make aid more effective. The OECD traces its roots to the Marshall Plan which sought to rebuild Europe after the Second World War. Today, it groups 30 member countries committed to democratic government and the market economy. It provides a forum where governments can compare and exchange policy experiences, identify good practices and promote decisions and recommendations. In addition to the analysis and advice it provides on a wide range of economic issues, the OECD is one of the world's largest and most reliable sources of statistical, economic and social data.
The OECD's work on aid effectiveness is undertaken by its Development Assistance CommitteeW, known as the DAC. One of OECD's oldest committees, the DAC was founded in the early 1960s to guide, promote and enhance co-operation with developing countries. Today, it comprises 23 members: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, United States and the European Commission (EC). These countries have significant aid programmes. The World Bank, the International Monetary Fund (IMF) and the United Nations Development Programme (UNDP) participate as observers.
Hosted by the DAC, the Working Party on Aid Effectiveness (WP-EFF) is the major international forum where developing countries join with multilateral and bilateral donors to work on improving the effectiveness of aid. It was set up in May 2003 to promote the global partnership for development agreed at the 2002 Financing for Development Conference in Monterrey and to accelerate progress towards the Millennium Development Goals. It is the body responsible for organising the Third High-Level Forum on Aid Effectiveness in Accra in September 2008.
The Working Party on Aid Effectiveness' primary function is to measure and encourage progress in implementing the commitments of the 2005 Paris Declaration and provide guidance on policy and good practice. The Working Party comprises senior policy advisers from the 23 DAC members, 23 developing countries and 11 multilateral organizations. It has a unique "tripartite" chairing arrangement, including representatives of a bilateral donor organisation, a multilateral organization and a developing-country partner. This reflects the partnership commitments embodied in the Paris Declaration. The WP-EFF also engages actively with civil society organizations. In order to effectively cover its broad mandate, it has established a number of Joint Ventures to examine particular areas of interest, including monitoring the Paris Declaration, public financial management, procurement, and managing for development results.
In addition to the work of the WP-EFF, the DAC tackles aid effectiveness issues through its other working parties and regular activities.
The DAC maintains and makes available unique and definitive statistics on the global aid effort. Its Working Party on Statistics tracks official development assistance over time, providing a firm basis for analytical work on aid trends and for assessments of aid effectiveness. Beyond the traditional OECD aid donors, its data collection also includes other official and private flows to developing countries.
One of the DAC's important tasks is to conduct regular peer reviews of its members' development policies, strategies and activities. Each year, the DAC conducts regular peer reviews of four or five of its members. These reviews look at how members are putting into practice the policy work carried out by the DAC, and how they are responding to international commitments and to their own national goals. These reviews are designed to encourage positive change, support mutual learning and raise the overall effectiveness of aid throughout the donor community.
Other aid effectiveness work is carried out by the DAC's networks—global fora that bring together experts in various fields.
The Network on Development Evaluation supports robust, informed and independent evaluation of aid activities. This Network promotes joint reviews of the effectiveness of aid, such as the Evaluation of the Implementation of the Paris Declaration. It also works to improve the standards and norms used in evaluations. The 30 Evaluation Network members include heads of evaluation from all DAC member countries and from the African Development Bank (AfDB), Asian Development Bank (ADB), European Bank for Reconstruction and Development (EBRD) and the World Bank.
The DAC's Network on Gender Equality, GENDERNET, produces practical tools to help integrate gender equality and women's empowerment into all aspects of development co-operation. It is currently focusing on the implementation of the Paris Declaration, designing a set of guiding principles to show how women's empowerment can be clearly integrated into aid effectiveness efforts to increase their impact.
The Network on Environment and Development Co-operation, ENVIRONET, aims to enhance the coherence of OECD country policies in the areas of environment and development co-operation, as called for by the Paris Declaration.
The DAC's Network on Poverty Reduction, POVNET, promotes economic growth for poverty reduction, stressing the importance of both the rate and the pattern of growth, and works to ensure that growth is broad-based and inclusive. Subjects of workshops held by this network have included applying Paris Declaration principles in agriculture and infrastructure.
The Network on Governance and Capacity Development, GOVNET, helps donors to be more effective in supporting democratic governance. It offers a forum to exchange experiences and lessons, identify and disseminate good practice, and develop policy and analytical tools. It has produced important publications on themes such as fighting corruption, building institutions and ensuring human rights are placed at the centre of aid effectiveness efforts.
The Network on Situations of Conflict and Fragility brings together experts on governance and conflict prevention from bilateral and multilateral development co-operation agencies, including the EC, the UN system, the IMF, the World Bank and regional banks. It helps to improve development co-operation and coherent international action in situations where the Millennium Development Goals are undermined by threats of violent conflict, human insecurity, fragility, weak governance and instability.
The DAC also works on emerging issues in aid effectiveness. In 2008, it published the first in a new series of yearly surveys to tackle two major information gaps that hinder increased aid effectiveness: future spending intentions of donors, and the proliferation of aid donors. The results of these surveys will help donors make more informed decisions about where they should focus their aid, and to improve aid predictability at the country level. New analyses of historical information are also showing where there is donor fragmentation within a country, prompting donors to seek a better division of labour amongst themselves.
The DAC is working to build recognition among the development community that trade is an important tool for development. Its aim is to increase support for "aid for trade" activities—aid that helps build poor countries' capacity to trade successfully. Experts from the DAC and the OECD Trade Committee are disseminating evidence of trade's impact on development and creating an analytical toolbox for improving the design and implementation of aid-for-trade programmes. This includes strengthening the application of the Paris Declaration principles to trade-related aid activities.
| License | CC-BY-SA-3.0 |
|---|---|
| Ported from | https://en.wikipedia.org/wiki/Aid_effectiveness (original) |
| Cite as | Chriswaterguy (2009–2026). "Aid effectiveness". Appropedia. Retrieved September 29, 2026. |
