Increasing Selectivity of Foreign Aid, 1984-2002
The authors examine the allocation of foreign aid by 41 donor agencies, bilateral and multilateral. Their policy selectivity index measures the extent to which a donor's assistance is targeted to countries with sound institutions and policies,...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/05/4268831/increasing-selectivity-foreign-aid-1984-2002 http://hdl.handle.net/10986/14090 |
| Summary: | The authors examine the allocation of
foreign aid by 41 donor agencies, bilateral and
multilateral. Their policy selectivity index measures the
extent to which a donor's assistance is targeted to
countries with sound institutions and policies, controlling
for per capita income and population. The poverty
selectivity index analogously looks at how well a
donor's assistance is targeted to poor countries,
controlling for institutional and policy environment as
measured by a World Bank index. The authors' main
finding is that the same group of multilateral and bilateral
aid agencies that are very policy focused are also very
poverty focused. The donors that appear high up in both
rankings are the World Bank's International Development
Association, the International Monetary Fund's Enhanced
Structural Adjustment Facility, Denmark, the United Kingdom,
Norway, Ireland, and the Netherlands. As a robustness check
the authors alternatively use institutional quality measures
independent of the World Bank and find the same pattern of
selectivity. They also find that policy selectivity is a new
phenomenon: in the 1984-89 period, aid overall was allocated
indiscriminately without any consideration to the quality of
governance, whereas in the 1990s there was a clear
relationship between aid and governance (institutions and
policies). This increasing selectivity of aid is good news
for aid effectiveness. The bad news is that the aid agencies
that the authors survey vary greatly in size. Some donors
that are largest in absolute size, such as France and the
United States, are not particularly selective. Japan comes
in high on the policy selectivity index but far down on the
poverty selectivity index, reflecting its pattern of giving
large amounts of aid in Asia to countries that are well
governed but in many cases not poor. |
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