Editing Aid effectiveness (section)

==Ways to improve aid effectiveness==

=== Conditionalities ===
{{Main|Conditionality}}

{{See also|Tied aid}}

A major proportion of aid from donor nations is [[Tied aid|tied]], mandating that a receiving nation spend on products and expertise originating only from the donor country. <ref name="tiedaid2">{{cite web |title=Tied aid strangling nations, says UN |url=http://ipsnews.net/interna.asp?idnews=24509 |url-status=dead |archive-url=https://web.archive.org/web/20101223203509/http://www.ipsnews.net/interna.asp?idnews=24509 |archive-date=23 December 2010 |access-date=27 May 2011 |publisher=ispnews.net}}</ref> [[Eritrea]] discovered that it would be cheaper to build its network of railways with local expertise and resources rather than to spend aid money on foreign consultants and engineers.<ref name="tiedaid2" /> [[United States|US]] law, backed by strong farm interests,<ref>{{cite news |date=27 April 2013 |title=Aid policy: Helping whom exactly? |url=https://www.economist.com/news/united-states/21576697-administration-proposes-overdue-reforms-americas-overseas-food-aid-helping-whom |access-date=5 May 2013 |work=economist}}</ref> requires [[food aid]] be spent on buying food from the US rather than locally, and, as a result, half of what is spent is used on [[transport]].<ref>{{cite web |date=20 September 2008 |title=Let them eat micronutrients |url=http://www.newsweek.com/id/160075 |access-date=27 May 2011 |publisher=newsweek.com}}</ref> As a result, tying aid is estimated to increase the cost of aid by 15–30%.<ref name="Economist">{{cite news |date=6 September 2008 |title=The future of aid |url=http://www.economist.com/world/international/displaystory.cfm?story_id=12060397 |access-date=27 March 2013 |work=economist}}</ref> [[Oxfam America]] and [[American Jewish World Service]] report that reforming US food aid programs could extend food aid to an additional 17.1 million people around the world.<ref>{{cite web |title=Food aid reform |url=http://www.oxfamamerica.org/campaigns/food-justice/food-aid |publisher=Oxfam America}}</ref>

The [[World Bank]] and the [[International Monetary Fund]], as primary holders of developing countries' debt, attach [[structural adjustment]] [[Conditionality|conditionalities]] to loans which generally include the elimination of state subsidies and the [[privatization]] of [[state services]]. For example, the [[World Bank]] presses poor nations to eliminate subsidies for [[fertilizer]] even while many farmers cannot afford them at market prices.<ref name="Malawi">{{cite news |last=Dugger |first=Celia W. |date=2 December 2007 |title=Ending famine simply by ignoring the experts |url=https://www.nytimes.com/2007/12/02/world/africa/02malawi.html |url-status=live |archive-url=https://web.archive.org/web/20110511212026/http://www.nytimes.com/2007/12/02/world/africa/02malawi.html |archive-date=11 May 2011 |access-date=27 May 2011 |newspaper=nytimes.com}}</ref> In the case of [[Malawi]], almost five million of its 13 million people used to need emergency food aid. However, after the government changed policy and subsidies for fertilizer and seed were introduced, farmers produced record-breaking corn harvests in 2006 and 2007 as production leaped to 3.4 million in 2007 from 1.2 million in 2005, making Malawi a major food exporter.<ref name="Malawi" /> In the former [[Soviet Union|Soviet]] states, the reconfiguration of public financing in their [[Transition economy|transition to a market economy]] called for reduced spending on health and education, sharply increasing poverty.<ref name="Soviet">{{cite news |date=12 October 2000 |title=Study Finds Poverty Deepening in Former Communist Countries |url=https://query.nytimes.com/gst/fullpage.html?res=9C07E0D8163FF931A25753C1A9669C8B63 |access-date=28 May 2011 |newspaper=nytimes.com}}</ref><ref>''Transition: The First Ten Years – Analysis and Lessons for Eastern Europe and the Former Soviet Union'', The World Bank, Washington, DC, 2002, p. 4.</ref><ref>{{cite news |date=11 October 2000 |title=Child poverty soars in eastern Europe |url=http://news.bbc.co.uk/1/hi/business/966616.stm |url-status=live |archive-url=https://web.archive.org/web/20110512034826/http://news.bbc.co.uk/1/hi/business/966616.stm |archive-date=12 May 2011 |access-date=27 May 2011 |work=BBC News}}</ref>

In their April 2002 publication, Oxfam Report reveals that aid tied to trade liberalization by the donor countries such as the European Union with the aim of achieving economic objective is becoming detrimental to developing countries.<ref>{{Cite web |date=April 2002 |title=Oxfam - Trade - Europe's Double Standards |url=http://www.oxfam.org.uk/what_we_do/issues/trade/bp22_eutrade.htm |url-status=dead |archive-url=https://web.archive.org/web/20031003013638/http://www.oxfam.org.uk/what_we_do/issues/trade/bp22_eutrade.htm |archive-date=3 October 2003 |access-date=28 May 2018}}</ref> For example, the EU subsidizes its agricultural sectors in the expense of Latin America who must liberalize trade in order to qualify for aid. Latin America, a region with a comparative advantage on agriculture and a great reliance on its agricultural export sector, loses $4 billion annually due to EU farming subsidy policies. Carlos Santiso advocates a "radical approach in which donors cede control to the recipient country".<ref>{{Cite journal |last=Santiso |first=Carlos |date=Fall 2001 |title=Good Governance and Aid Effectiveness: The World Bank and Conditionality |url=https://www.researchgate.net/publication/228959367 |journal=The Georgetown Public Policy Review |volume=7 |issue=1 |pages=1–22}}</ref>

=== Cash aid versus in-kind aid ===
A report by a High Level Panel on Humanitarian Cash Transfers found that only 6% of aid is delivered in the form of cash or vouchers.<ref name="cashpanel">{{cite web |date=9 February 2016 |title=Doing cash differently: how cash transfers can transform humanitarian aid |url=https://www.odi.org/publications/9876-cash-transfers-humanitarian-vouchers-aid-emergencies |website=ODI}}</ref> But there is a growing realization among aid groups that, for locally available goods, giving [[Cash and Voucher Assistance|cash or cash vouchers]] instead of imported goods is a cheaper, faster, and more efficient way to deliver aid.<ref name="csmonitor">{{cite journal |date=4 June 2008 |title=UN aid debate: Give cash, not food? |url=http://www.csmonitor.com/2008/0604/p01s02-woaf.html |journal=Christian Science Monitor}}</ref>

Evidence shows that cash can be more transparent, more accountable, more cost effective, help support local markets and economies, and increase financial inclusion and give people more dignity and choice.<ref name="cashpanel" /> Sending cash is cheaper as it does not have the same transaction costs as shipping goods. Sending cash is also faster than shipping the goods. In 2009 for sub-Saharan Africa, food bought locally by the WFP cost 34 percent less and arrived 100 days faster than food sent from the United States, where buying food from the United States is required by law.<ref name="fixes">{{cite news |last=Rosenberg |first=Tina |date=24 April 2013 |title=When food isn't the answer to hunger |url=http://opinionator.blogs.nytimes.com/2013/04/24/when-food-isnt-the-answer-to-hunger/ |access-date=5 May 2013 |newspaper=nytimes.com}}</ref> Cash aid also helps local food producers, usually the poorest in their countries, while imported food may damage their livelihoods and risk continuing hunger in the future.<ref name="fixes" /> [[Unconditional cash transfer|Unconditional cash transfers]], for example, appear to be an effective intervention for reducing extreme poverty, while at the same time also improving health and education outcomes.<ref name="doi10.1002/14651858.CD011135.pub2">{{cite journal |last1=Pega |first1=Frank |last2=Liu |first2=Sze |last3=Walter |first3=Stefan |last4=Pabayo |first4=Roman |last5=Saith |first5=Ruhi |last6=Lhachimi |first6=Stefan |year=2017 |title=Unconditional cash transfers for reducing poverty and vulnerabilities: effect on use of health services and health outcomes in low- and middle-income countries |journal=Cochrane Database of Systematic Reviews |volume=11 |issue=4 |pages=CD011135 |doi=10.1002/14651858.CD011135.pub2 |pmc=6486161 |pmid=29139110}}</ref><ref name="doi10.1002/14651858.CD011135.pub3">{{cite journal |last1=Pega |first1=Frank |last2=Pabayo |first2=Roman |last3=Benny |first3=Claire |last4=Lee |first4=Eun-Young |last5=Lhachimi |first5=Stefan |last6=Liu |first6=Sze |year=2022 |title=Unconditional cash transfers for reducing poverty and vulnerabilities: effect on use of health services and health outcomes in low- and middle-income countries |journal=Cochrane Database of Systematic Reviews |volume=2022 |issue=3 |pages=CD011135 |doi=10.1002/14651858.CD011135.pub3 |pmc=8962215 |pmid=35348196}}</ref>

The [[World Food Program]] (WFP), the biggest non-governmental distributor of food, announced that it will begin distributing cash and vouchers instead of food in some areas, which [[Josette Sheeran]], the WFP's executive director, described as a "revolution" in food aid.<ref name="csmonitor" /><ref name="wfp">{{cite web |date=12 August 2008 |title=Cash roll-out to help hunger hot spots |url=http://www.wfp.org/english/?ModuleID=137&Key=2899 |url-status=dead |archive-url=https://web.archive.org/web/20090212124012/http://www.wfp.org/english/?ModuleID=137&Key=2899 |archive-date=12 February 2009 |access-date=5 May 2013 |website=World Food Programme}}</ref>

=== Coordination ===
While the number of Non-governmental Organization have increased dramatically over the past few decades, fragmentation in aid policy is an issue.<ref name="Economist" /> Because of such fragmentation, health workers in several African countries, for example, say they are so busy meeting western delegates that they can only do their proper jobs in the evening.<ref name="Economist" />

One of the Paris Declaration's priorities is to reduce systems of aid that are "parallel" to local systems.<ref name="Economist" /> For example, [[Oxfam]] reported that, in Mozambique, donors are spending $350 million a year on 3,500 technical consultants, which is enough to hire 400,000 local civil servants, weakening local capacity.<ref name="Economist" /> Between 2005 and 2007, the number of parallel systems did fall, by about 10% in 33 countries.<ref name="Economist" /> In order to improve coordination and reduce parallel systems, the Paris Declaration suggests that aid recipient countries lay down a set of national development priorities and that aid donors fit in with those plans.<ref name="Economist" />

=== Aid priorities ===
Laurie Garret, author of the article "The Challenge of Global Health" points out that the current aid and resources are being targeted at very specific, high-profile diseases, rather than at general [[public health]].  Aid is "stovepiped" towards narrow, short-term goals relating to particular programs or diseases such as increasing the number of people receiving anti-retroviral treatment, and increasing distribution of bed nets. These are band aid solutions to larger problems, as it takes healthcare systems and infrastructure to create significant change.  Donors lack the understanding that effort should be focused on broader measures that affect general well-being of the population, and substantial change will take generations to achieve. Aid often does not provide maximum benefit to the recipient, and reflects the interests of the donor.<ref name="Garrett">{{cite journal |last=Garrett |first=Laurie |title=The Challenge of Global Health |journal=Foreign Affairs |volume=86 |issue=1}}</ref>

Furthermore, consider the breakdown, where aid goes and for what purposes.  In 2002, total gross foreign aid to all developing countries was $76 billion.  Dollars that do not contribute to a country's ability to support basic needs interventions are subtracted.  Subtract $6 billion for debt relief grants. Subtract $11 billion, which is the amount developing countries paid to developed nations in that year in the form of loan repayments.  Next, subtract the aid given to middle income countries, $16 billion.  The remainder, $43 billion, is the amount that developing countries received in 2002.  But only $12 billion went to low-income countries in a form that could be deemed budget support for basic needs.<ref name="Sachs">Sachs, Jeffrey D. 2005. The End of Poverty: Economic Possibilities for Our Time. New York: Penguin Books.</ref> When aid is given to the [[Least Developed Countries]] who have good governments and strategic plans for the aid, it is thought that it is more effective.<ref name="Sachs" />

=== Logistics ===
[[Humanitarian aid]] is argued to often not reach those who are intended to receive it. For example, a report composed by the World Bank in 2006 stated that an estimated half of the funds donated towards health programs in sub-Saharan Africa did not reach the clinics and hospitals. Money is paid out to fake accounts, prices are increased for transport or warehousing, and drugs are sold to the black market. Another example is in Ghana, where approximately 80% of donations do not go towards their intended purposes. This type of corruption only adds to the criticism of aid, as it is not helping those who need it, and may be adding to the problem.<ref name="Garrett" /> Only about one fifth of U.S. aid goes to countries classified by the OECD as 'least developed.'<ref name="Singer">Singer, Peter. 2009. [[The Life You Can Save]]. New York:Random House.</ref> This "pro-rich" trend is not unique to the United States.<ref name="Sachs" /><ref name="Singer" /> According to Collier, "the middle income countries get aid because they are of much more commercial and political interest than the tiny markets and powerlessness of the bottom billion."<ref name="Collier">{{Cite book |last=Collier |first=Paul |url=https://archive.org/details/bottombillionwhy00coll_0 |title=The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It |date=25 May 2007 |publisher=Oxford University Press |isbn=9780199740949 |language=en |url-access=registration}}</ref> What this means is that, at the most basic level, aid is not targeting the most extreme poverty.<ref name="Sachs" /><ref name="Singer" />

The logistics in which the delivery of humanitarian occurs can be problematic. For example, an earthquake in 2003 in [[Bam, Iran]] left tens of thousands of people in need of disaster zone aid. Although aid was flown in rapidly, regional belief systems, cultural backgrounds and even language seemed to have been omitted as a source of concern. Items such as religiously prohibited pork, and non-generic forms of medicine that lacked multilingual instructions came flooding in as relief. An implementation of aid can easily be problematic, causing more problems than it solves.<ref>{{Cite journal |last1=Habibzadeh |first1=Farrokh |last2=Yadollahie |first2=Mahboobeh |last3=Kucheki |first3=Maryam |date=August 2008 |title=International aid in disaster zones: help or headache? |journal=The Lancet |volume=372 |issue=9636 |pages=374 |doi=10.1016/s0140-6736(08)61157-5 |issn=0140-6736 |pmid=18675688 |s2cid=50115 |doi-access=free}}</ref>

Considering transparency, the amount of aid that is recorded accurately has risen from 42% in 2005 to 48% in 2007.<ref name="Economist" />

=== Improving the economic efficiency of aid ===
Currently, donor institutions make proposals for aid packages to recipient countries.  The recipient countries then make a plan for how to use the aid based on how much money has been given to them.  Alternatively, [[Non-governmental organizations|NGO]]'s receive funding from private sources or the government and then implement plans to address their specific issues. According to Sachs, in the view of some scholars, this system is inherently ineffective.<ref name="Sachs" />

According to Sachs, we should redefine how we think of aid.  The first step should be to learn what developing countries hope to accomplish and how much money they need to accomplish those goals.  Goals should be made with the [[Millennium Development Goals]] in mind for these furnish real metrics for providing basic needs.  The "actual transfer of funds must be based on rigorous, country-specific plans that are developed through open and consultative processes, backed by [[good governance]] in the recipient countries, as well as careful planning and evaluation."<ref name="Sachs" />

Possibilities are also emerging as some developing countries are experiencing rapid economic growth, they are able to provide their own expertise gained from their recent transition. This knowledge transfer can be seen in donors, such as Brazil, whose $1 billion in aid outstrips that of many traditional donors.<ref name="ODI1">{{Cite web |author1=Lidia Cabral |author2=Julia Weinstock |date=October 2010 |title=Brazil: an emerging aid player |url=https://www.odi.org/publications/5120-brazil-emerging-aid-player |access-date=28 May 2018 |website=ODI |language=en}}</ref> Brazil provides most of its aid in the form of technical expertise and knowledge transfers.<ref name="ODI1" /> This has been described by some observers as a 'global model in waiting'.<ref>{{Cite news |last=Cabral |first=Lidia |date=21 July 2010 |title=Brazil's development cooperation with the South: a global model in waiting |url=https://www.odi.org/comment/4952-brazils-development-cooperation-south-global-model-waiting |access-date=28 May 2018 |work=ODI |language=en}}</ref>

=== Using the private sector ===
According to [[Laurie Garrett]], for health aid to be maximized efficiently and most optimally, donations need to be directed to areas such as local industries, franchises, or profit centers in developing countries. By doing so, these actions can sustain health related spending and result in growth in the long run.<ref>Garrett, Laurie. 2007. The Challenge of Global Health. ''Foreign Affairs'' 86 (1):14-38]</ref>

Paul Collier, in ''The Bottom Billion'', suggests a model he calls “Independent Service Authorities”. These are organizations, independent from the government, that co-opt civil society to manage aid and public money and incorporate the scrutiny of public opinion and NGOs to determine how to maximize output from the expenditure of this money.<ref>{{cite book|last=Collier|first=Paul|title=The Bottom Billion: Why the Poorest Countries Are failing and What Can Be Done about It.|publisher=Oxford|year=2007}}</ref>

=== Sensitivity to recipient country institutions ===
Since the effectiveness of aid usually depends on the good-functioning of institutions in the recipient country, and since potential recipients are very varied in this respect, Charles Kenny (2006) argues that aid strategies must be tailored to the state of institutions in each case. Where institutions are strong, it is appropriate to provide programmatic aid. Where they are weak, there may be a role for aid in analysis, consensus-building and technical assistance to improve them, and meanwhile other "insulated" projects might go ahead if they do not harm the prospects for developing sound governmental institutions.<ref>{{cite report|url=https://openknowledge.worldbank.org/bitstream/handle/10986/9296/wps4005.pdf|title=What is effective aid? How would donors allocate it?|last1=Kenny|first1=Charles|date=September 2006|publisher=World Bank|access-date=2021-03-05}}</ref>

=== Best practices according to the High Level Forums on Aid Effectiveness ===
The Paris Declaration and other results of the [[High level forums on aid effectiveness|High Level Forums on Aid Effectiveness (2003-2011)]] embodied a broad consensus on what needed to be done to produce better development results.<ref>{{Cite web|url=http://www.oecd.org/dac/effectiveness/|title=Effective development co-operation - OECD|website=www.oecd.org|access-date=2019-07-04}}</ref> Its principles lay open the possible ways to undertake, which can be interpreted also as the major objectives of good aid: fostering recipient countries' ownership of development policies and strategies, maximizing donors' coordination and harmonization, improving aid transparency and mutual accountability of donors and recipients, just to name a few.<ref>See OECD, "The Paris Declaration on Aid Effectiveness". March 2, 2005.</ref>

The forums were supported by work done by the OECD, which had explored—through peer reviews and other work by the Development Assistance Committee (DAC)—the reasons why aid has and has not worked. This has resulted in a body of best practices and principles that can be applied globally to make aid work better.

====Improving aid transparency and mutual accountability of donors and recipients====
Some believe that the way to improvement is through better monitoring and evaluation, increased transparency, accountability and learning. For instance, Stefan Schmitz, a former senior aid official in the German government and the OECD, has argued that reporting duties, results-orientated action and ongoing performance assessments are essential for the sake of aid effectiveness, but political will must be already there for this to happen.<ref>{{Cite web|title=Comprehensive thinking|url=http://www.inwent.org/ez/articles/167079/index.en.shtml|url-status=dead|archive-url=https://web.archive.org/web/20100706045452/http://www.inwent.org/ez/articles/167079/index.en.shtml|archive-date=2010-07-06|access-date=2010-03-11}}</ref>

The Accra Agenda for Action states that transparency and accountability are essential elements for development results, as well as drivers of progress.<ref>OECD, "The Accra Agenda For Action", 3rd High Level Forum on Aid Effectiveness, September 4, 2008.</ref> Mutual accountability and transparency is one of the five partnership commitments of the Paris Declaration.<ref>OECD, "The Paris Declaration on Aid Effectiveness". March 2, 2005.</ref> Through 'transparency', donors and recipients can be held accountable for what they spend and aid can be made more effective by knowing the three Ws of transparency:
* Who gives money to which recipient?
* What project is being funded and for what purpose? and
* Where?<ref>Kharas, H., "Transparency: Changing the Accountability Engagement, and Effectiveness of Aid", in: Kharas, H., Makino, K., Jung, W., "Catalyzing Development", Brookings Institution Press, Washington, D.C. 2011.</ref>

Transparency offers a valuable answer to insecurity, making aid "predictable" and "reliable". Transparency has been shown to improve service delivery and to reduce opportunities for diversion and therefore corruption.<ref>Bjorkman, M., Svensson, J., "Power to the People: Evidence from a Randomized Field Experience on Community-Based Monitoring in Uganda", ''Quarterly Journal of Economics'' 124, no. 2: 735-69, 2009.</ref>

Transparency can be defined as a basic expression of mutual accountability.<ref>Mary Robinson’s definition, in the OECD Survey on Monitoring The Paris Declaration, 2008.</ref> Mutual accountability can only work if there is a global culture of transparency that demands provision of information through a set of rules and behavioral norms, which are difficult to enforce in the case of official development cooperation. In particular for emerging economy donors and private development assistance, these norms are only at a nascent stage. Kharas<ref>See Kharas, H., "Transparency: Changing the Accountability Engagement, and Effectiveness of Aid", in: Kharas, H., Makino, K., Jung, W., "Catalyzing Development", Brookings Institution Press, Washington, D.C. 2011.</ref> suggest to adopt the "regulation through information" approach,<ref>Majone, G. "The new European Agencies: regulation by information", ''Journal of European Public Policy'' 4, no. 2: 262-75, 1997.</ref> which has been developed and has proven its effectiveness in the case of the European integration. In fact, at the international level, when the enforcement of mandatory rules is difficult, the solution could be to provide and make available transparent, relevant, accurate and reliable information, which can be used to reward or sanction individual aid agencies according to their performances. This means establishing a strong culture of accountability within aid, which rewards aid successes but penalizes failures.

To achieve this, literature on the topic<ref>See, for example, Pranay, S., and Hubbard, M., "A Future for Aid Data: Research towards a South-South Cooperation Data Categorization to complement on-going IATI Categorizations’", ongoing research, DFID Future of Aid and Beyond Research Competition 2010-11, 2011.</ref> suggest that donors should agree on adopting a standardized format for providing information on volume, allocation and results, such as the [[International Aid Transparency Initiative]] (IATI), or other similar standards, and commit to improve recipient countries' databases with technical, financial and informational support. The format should be easily downloadable and with sufficient disaggregation to enable comparison with other data. Making aid data public and comparable among donors, would be likely to encourage a process of positive emulation towards a better usage of public funds.  After all, [[official development assistance]] (ODA) is a voluntary transfer that depends on the support of donor country taxpayers. Donors should therefore consider improving the transparency and traceability of aid funds also as a way of increasing engagement and support toward aid inside their own country. Moreover, a generalized adoption of IATI would ensure the publication of aid information in a timely way, the compatibility with developing countries' budgets and the reliability of future projections, which would have a strong and positive effect on the predictability of aid.<ref>Kharas, H., Makino, K., Jung, W., "Catalyzing Development", Brookings Institution Press, Washington, D.C. 2011.</ref>

Finally, to improve accountability while building evaluation capabilities in aid recipient countries and systematically collecting beneficiaries’ feedback, different mechanisms to evaluate and monitor transparency should be considered, such as independent third-party reviews, peer reviews or mutual reviews.<ref>See Droop, J., Isenman, P., and Mlalazi, B., "Mutual accountability in Aid Effectiveness: International-Level Mechanisms", Briefing Note, n.3, Oxford Policy Management, 2008.</ref>