Economics at your fingertips  

New Perspectives on Aid Effectiveness

Roland-Holst, David and Finn Tarp ()

MPRA Paper from University Library of Munich, Germany

Abstract: Over the last five decades, development assistance has evolved dramatically in response to an equally mutable global political and economic landscape. In this paper, we examine this evolution and discuss how the effectiveness of aid has been and will be seen in the eyes of donors, intended beneficiaries, and outside observers. From an historical perspective, we note that the effectiveness debate has been confined by preoccupation with macro institutions and outcomes. We also discuss how the relative importance of aid has changed with the rapid growth of trade and private capital markets. Looking ahead, we argue that great care should be taken when applying macro performance evaluation to development assistance. This approach increases the risk that aid will be politicized and allocated inefficiently. Rationing credit in whatever form it takes by macro-criteria inevitably screens out credit- or need-worthy recipients, while many beneficiaries in attractive macro settings may be less deserving. Simplistic macro rules-of-thumb not only compromise more rigorous credit and need standards; they reinforce the adversity of people living under substandard governance. In reality, aid and lending relationships involve complex contractual and agency relationships that are essentially microeconomic in nature. We therefore discuss how conceptual innovations in modern economic theory might be enlisted to improve aid effectiveness. In passing, we also review some implications for public donor institutions of another globalization phenomenon, rapidly emergent private policy agencies in the form of NGOs.

Keywords: Foreign aid; aid effectiveness (search for similar items in EconPapers)
JEL-codes: F35 (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link) original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().

Page updated 2019-11-15
Handle: RePEc:pra:mprapa:29823