Where Does the Money Go? Best and Worst Practices in Foreign Aid

  title={Where Does the Money Go? Best and Worst Practices in Foreign Aid},
  author={William R. Easterly and Tobias Pfutze},
  journal={Development Economics: Macroeconomic Issues in Developing Economies eJournal},
This paper does not address the issue of aid effectiveness -- that is, the extent to which foreign aid dollars actually achieve their goals -- but on "best practices" in the way in which official aid is given, an important component of the wider debate. First we discuss best practice for an ideal aid agency and the difficulties that aid agencies face because they are typically not accountable to their intended beneficiaries. Next we consider the transparency of aid agencies and four additional… 

Rhetoric versus Reality: The Best and Worst of Aid Agency Practices

Foreign aid critics, supporters, recipients, and donors have produced eloquent rhetoric on the need for better aid practices— has this translated into reality? This paper attempts to monitor the best

Foreign Aid in Sub-Saharan Africa Countries: Does Foreign Aid Make a Difference in Development?

Each year donors transfer tens of billions of dollars in the form of foreign aid to developing countries. Moreover, based on new pledges and greater commitments to development assistance from donor

Making Progress on Foreign Aid

Foreign aid is one of the most important policy tools that rich countries use for helping poor countries to improve population well-being and facilitate economic and institutional development. The

Ideas, Interests and Foreign Aid

Why do countries give foreign aid? Although many countries have official development assistance programs, this book argues that no two of them see the purpose of these programmes in the same way.

Governance and management for better aid effectiveness: a donor country’s perspective

Abstract This study examines aid effectiveness from a donor’s perspective. The vast majority of discussions on aid effectiveness have been devoted to whether or not recipient countries possess

Role of Aid Politics on Its Effectiveness for Global Development Purposes

Foreign aid has been distributing for many decades with the ‘theoretical’ expectation that it will work as a catalyst for development by boosting domestic savings, investment and economic activities.

Evaluating Aid Agencies: Challenges, Comparisons, and Causes of Best Aid Practices

How can foreign aid be more effective? The development community has found one such answer in a movement to identify best aid practices, and to monitor, evaluate, and rank the performance of

What Determines the Size of Aid Projects

Aid Effectiveness: Can It Be Improved?

The last fifteen years have seen an intensive discussion on the effectiveness of aid. Part of the debate focused on the (often confusing and conflicting) evidence from growth regressions regarding

The Institutional Foundations of Foreign Aid Fragmentation

Decades of research shows that fragmented foreign aid is less effective than its centralized and streamlined counterpart. Despite this, many country donors continue to thinly delegate their aid money



The institutional economics of foreign aid

Summary From an institutional point of view, official development assistance differs from domestically financed services in important ways. First, the beneficiaries and financiers are not just

Accountability, Participation and Foreign Aid Effectiveness

Foreign aid involves a chain of accountability relationships stretching from international donors through national governments and implementing agencies to a set of ultimate end users of the goods

The Increasing Selectivity of Foreign Aid, 1984-2002

Who Gives Foreign Aid to Whom and Why?

This paper studies the pattern of allocation of foreign aid from various donors to receiving countries. We find considerable evidence that the direction of foreign aid is dictated as much by

Exploring the failure of foreign aid: The role of incentives and information

The stated purpose of foreign aid is to promote economic and human development. Recently, the ability of foreign aid to achieve its goals is called into question. Widespread conceptual and empirical

Clarifying the Foreign Aid Puzzle: A Comparison of American, Japanese, French, and Swedish Aid Flows

This study explores the donor side of debates revolving around the proper role of foreign assistance as a foreign policy tool, by empirically testing for the aid determinants of four industrial

Proliferation and fragmentation: Transactions costs and the value of aid

Abstract The problem of the proliferation of the number of aid donors and aid channels continues to worsen. It is widely and plausibly believed that this significantly reduces the value of aid by

The Politics of Effective Foreign Aid

There is little consensus on whether foreign aid can reliably increase economic growth in recipient countries. We review the literature on aid allocation and provide new evidence suggesting that

Crushed Aid: Fragmentation in Sectoral Aid

This paper measures and compares fragmentation in aid sectors. Past studies focused on aggregate country data but a sector analysis provides a better picture of fragmentation. We start by counting