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Lessons on Foreign Aid and Economic Development pp 85–107Cite as

Palgrave Macmillan

Evaluating Aid Agencies: Challenges, Comparisons, and Causes of Best Aid Practices

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Abstract

How can foreign aid be more effective? The development community has found one such answer in a movement to identify best aid practices, and to monitor, evaluate, and rank the performance of different aid donors along these measures. Although foreign aid donors have committed to implementing these best aid practices, the research on donor performance and rankings show that donors are still not reaching their stated goals. This chapter summarizes the findings in the literature on donor performance and examines the research surrounding the factors that influence donors’ decisions to engage in best aid practices. Questions of donor motivation and the political economy of donor strategies and performance have come under scrutiny for influencing ineffective aid strategies.

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Notes

  1. 1.

    For empirical studies supporting the ineffectiveness of foreign aid in achieving development, see Boone (1996), Svensson (1999, 2000), Easterly (2001, 2006), Knack (2001), Bräutigam and Knack (2004), Easterly et al. (2004), Djankov et al. (2008), Heckelman and Knack (2008), Williamson (2008), Moyo (2009), Shleifer (2009), Skarbek and Leeson (2009), and Young and Sheehan (2014).

  2. 2.

    For example, Minasyan et al. (2017) find that only recipient countries with increased aid flows of “high quality” benefited in terms of increasing GDP per capita. Djankov et al. (2009) find that a lack of aid specialization leads to more corruption in recipient countries and reduces economic growth. Kimura et al. (2012) also find that aid proliferation has a negative effect on the economic growth of recipient countries, especially in Africa.

  3. 3.

    See, Accra Agenda for Action (2008, pg. 17), World Bank (1998, pg. 25), Commission for Africa (2005, pgs. 62, 320), IMF and World Bank (2005, pg. 171, 2006, pg. 62, 2010, pg. 131), Easterly (2007), Frot and Santiso (2009), Kimura et al. (2012).

  4. 4.

    Anderson (2012) finds that bilateral donors could reduce transaction costs by $2.5 billion per year if they specialized more.

  5. 5.

    Though in Birdsall et al. (2010), bilateral donors are worse than multilateral donors in administrative costs (which falls in the broader Maximizing Efficiency pillar).

  6. 6.

    See also, Acharya et al. (2006), Kharas (2009), Anderson (2012), Annen and Moers (2012), Barthel et al. (2014), Fuchs et al. (2015).

  7. 7.

    However, most of the deviations that Clist points to are not dramatic changes—the donor rankings do change, but they stay relatively within the same vicinity. For example, Clist calls Sweden a “large” fall when altering Easterly and Williamson’s measurements, but Sweden falls from 8th to the 12th rank.

  8. 8.

    MCC’s ODA commitments rather than disbursements are used. However, they only alter MCC’s data from disbursements to commitments and analyze the other agencies with disbursements. If all of the donors’ changes were made to commitments, it is not clear whether the MCC would have jumped in the rankings.

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Authors and Affiliations

  1. State University of New York, Purchase, Purchase, NY, USA

    Liya Palagashvili

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  1. Liya Palagashvili
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Correspondence to Liya Palagashvili .

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  1. University of Wisconsin-La Crosse, La Crosse, WI, USA

    Nabamita Dutta

  2. Mississippi State University, Mississippi, MS, USA

    Claudia R. Williamson

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Palagashvili, L. (2019). Evaluating Aid Agencies: Challenges, Comparisons, and Causes of Best Aid Practices. In: Dutta, N., Williamson, C.R. (eds) Lessons on Foreign Aid and Economic Development. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-22121-8_5

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