Part of the Contributions to Economics book series (CE)


A detailed analysis of the entire ODA value chain (provision, allocation and utilization) comes to the conclusion that foreign aid has not the power to transform societies/governments and force economic development in re-cipient countries. Despite shortcomings rooted in the aid allocation and utilization process itself, it is the complexity of societies that does not al-low for one-size-fits-all approaches still commonly prescribed by aid agencies. Thus measured by the objective to spur economic development of low-income countries, the recent aid optimism cannot be upheld upon closer scrutiny. Regardless of that, international and national aid agencies have laid out even more extensive and detailed plans and strategies than ever before, promising to halve poverty with increased quantities of aid, brought up in “innovative” ways. Catchy constructions such as pro-poor growth and country ownership as well as renaming old-fashioned IMF credit lines into poverty reduction facilities mask the fact that the poverty orientation of foreign aid has not significantly improved. PRSPs sound promising, but may fall into the same “conditionality trap” that SAPs did in the 1980s and 1990s. Donors’ allocation policies involve so many an-nual reports, strategy papers and frameworks by so many different organi-zations that (even benevolent) recipient countries’ governments must di-vert most of their scarce management resources in order to comply with the manifold conditions imposed therein, leaving not much left for tailored strategies concentrating on the local population. And in most countries ruled under poor governance, SAPs were so often repeated that they actu-ally sustain these regimes and delayed or even prohibited reforms. Never-theless, donors did not resolve the problem of conditionality but went over to prefer and select those recipients that do well in certain policy fields. So far, it remains an open question whether the poor will benefit from such a shift towards past performance indicators.


Allocation Policy Recipient Country Policy Field Manifold Condition Utilization Process 

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© Physica-Verlag Heidelberg 2007

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