Measuring Aid Flows: A New Approach

Charles C. Chang, Eduardo Fernandez-Arias and Luis Servén

No 4146, Research Department Publications from Inter-American Development Bank, Research Department

Abstract: The debate on the effectiveness of foreign aid has intensified in recent years as aid has come under increasing budgetary pressures in donor countries. Whatever the merits of the opposing arguments, the fundamental issue arises of whether conventionally-used measures of aid such as ODA, which lump together grants and loans, accurately reflect true aid flows. This paper analyzes the methodological shortcomings of conventional aid measures, and proposes a new valuation approach that measures official aid flows as the sum of grants and the grant equivalents of official loans. This conceptually superior aid measure can diverge significantly from the conventional aggregates and provide a quite different view on major aid trends.

Date: 1998-12
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Related works:
Working Paper: Measuring aid flows: a new approach (1999)
Working Paper: Measuring Aid Flows: A New Approach (1998)
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