Governance Indicators, Aid Allocation, and the Millennium Challenge Account

Daniel Kaufmann and Aart Kraay ()

Development and Comp Systems from University Library of Munich, Germany

Abstract: Aid works best when it is directed to countries with relatively good institutions and policies. But how should good governance be measured, and how can aid allocation rules be designed in light of the strengths and weaknesses of existing measures? We address in brief a number of methodological and applied challenges, motivated by the U.S. government's recent proposal to allocate resources from the new Millennium Challenge Account (MCA), the issues and recommendations apply more broadly. Among others, we discuss the implications of margins of error in governance data, the difficulties in measuring trends, and the need to complement existing cross-country indicators with in-depth country diagnostics.

Keywords: Millennium Challenge Account; MCA; Aid Effectiveness; Aid Allocation; Governance Indicators; Governance Data (search for similar items in EconPapers)
JEL-codes: K42 O10 O19 (search for similar items in EconPapers)
Date: 2004-05-14
New Economics Papers: this item is included in nep-afr, nep-dev, nep-law and nep-pol
Note: Type of Document - pdf
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpdc:0405013

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