The Pattern of Aid Giving: The Impact of Good Governance on Development Assistance

The Pattern of Aid Giving: The Impact of Good Governance on Development Assistance

The Pattern of Aid Giving: The Impact of Good Governance on Development Assistance

The Pattern of Aid Giving: The Impact of Good Governance on Development Assistance

Synopsis

Using econometric analysis, the author examines factors that determine patterns of aid giving, including aggregate aid flows, aid from multilateral organizations and aid from bilateral donors such as Germany, Japan, the U.S. and Arabia.

Excerpt

Has good governance been rewarded in the allocation of aid in the 1990s? This question is at the heart of this book. Laymen and laywomen often think that to answer such a question is rather straightforward and that all one needs to do is to see how much aid is given to countries that fare high on some measure of governance compared to those that perform badly. Unfortunately, things are not quite so simple. On the most basic level, for example, one needs to control for the impact of other variables. Failure to account for these other variables could lead to distorted conclusions. These and other complications necessitate the use of sometimes rather complex statistical estimation techniques. An unfortunate consequence is that an analysis, which employs such techniques, becomes less accessible to readers than one would hope for.

Nevertheless, I hope to have written a book that is understandable to most students, policy makers and activists in the wider aid and development community even if they do not have major statistical training. I have tried to keep technical jargon to a minimum and to explain technical concepts wherever possible. Still, those without any knowledge of statistics might want to skip the first part of Chapter 4. For these readers it is sufficient to understand that we need to distinguish between two stages of the aid allocation by all those donors, which do not give some positive, if often small, amount of aid to all recipient countries. For these donors there is an aid eligibility stage, where the main objective is to assess whether good performance in terms of governance raises the likelihood of being eligible for aid. And then there is also a level stage, where the main objective is to analyse whether countries that score high on aspects of good governance receive more aid than other eligible countries. For the other donors, which give some aid to all or almost all countries, there is no need to address the aid eligibility stage and we can concentrate on the level stage right away.

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