How donors can boost aid effectiveness
| Author | Sanjeev Gupta/Catherine Pattillo/Smita Wagh |
| Position | IMF African Department |
| Pages | 129-139 |
Page 129
With debt burdens declining and aid volumes rising, hope is growing that low-income countries can now invest more in areas like education. Much of the advice on how to make aid more effective has been directed at recipient countries, but donors have a role to play, too. A new IMF Working Paper examines long-term changes in the volume, form, and types of aid and argues that donor choices can make a difference.
Page 138
The sometimes heated debate over the effectiveness of increased aid has typically centered on what recipient countries can do to make the best use of it. But donors can play a more constructive role, too. A new IMF Working Paper takes a closer look at the implications of long-term changes in the volume, form, and types of aid and argues that donor choices can make a difference.
Many analysts see aid as crucial in promoting the development of low-income countries that have little access to private capital. Aid can help build human capital and improve productive and export capacities. But persistently low growth and stubborn poverty in a number of developing countries have sparked a debate about the conditions under which aid is effective. In the past few years, the global community has acknowledged that a new approach is needed-one that couples greater country ownership of needed reforms in recipient countries with donor initiatives to increase aid, open markets to developing country products, and, most recently, provide extensive debt relief.
With scaled-up aid now in the offing, the debate has shifted to how to ensure that these resources translate into growthenhancing measures, including longer-term investments in education and health care. Clearly, recipient countries will need to take more ambitious steps to improve governance and reduce corruption. Should more be asked of donors also?
The Working Paper examines issues surrounding more generous and less volatile aid, as well as the types of aid that would be most conducive to helping recipient countries reach the UN Millennium Development Goals.
The 2002 Monterrey, Mexico, International Conference on Financing for Development reiterated a call for developed countries to allocate 0.7 percent of their gross national product (GNP) to official development assistance (ODA). As of 2004, however, only...
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