Comments on "Foreign Aid Effectiveness And Selectivity: New Results" The Massachusetts Avenue Development Seminar (mads)

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Comments on "Foreign Aid Effectiveness And Selectivity: New Results"

“Selectivity” and Aid, 1984-2002

  • There are indeed indications that the relationship between aid absorption and local policy climate in low-income areas has been changing somewhat over time—although not necessarily in the expected directions…

Beyond Policy Climate: Other Possible Criteria and Attendant Indicators For Measuring Aid Effectiveness

  • Economic Performance [per capita output, per capita exports]

  • Living Standards [per capita output, life expectancy]

  • Structural Aid Dependence [ODA/GNI, ODA/exports, ODA/imports, ODA/FDI]

  • Admittedly crude indicators—but relatively reliable data (cf. international poverty lines, etc.)

Disaggregating Performance By Region, 1984-2002

  • “Low and Middle Income Countries”: World Bank Designation for All Developing Regions

  • East Asia

  • South Asia

  • Latin America and the Caribbean

  • Middle East

  • Sub-Saharan Africa

  • Also, two “special cases” of highly “political” aid: Israel and the Russian Federation

Performance Indicators for Developing World and by Region

  • 1984 versus 2002

  • (regions listed in descending order of overall performance)

East Asia & Pacific



Preliminary Conclusions

  • Did the policy climate in recipient low-income areas improve between 1984 and 2002? Very clearly, yes—improvement was marked and general.

  • Did aid “selectivity” and aid “effectiveness” contribute positively to this outcome? The answer to this question is not at all self-evident.

  • For low-income, aid-receiving areas as a whole, trends were generally positive for economic performance (up), living standards (up), and structural aid dependence (down).

  • But performance “story lines” varied tremendously between regions—with the most heavily aid-dependent areas characterized by measured stagnation, or retrogression, in economic performance and living standards.

  • How to explain the striking negative association among regions between high aid levels and poor trends in economic performance and living standards: Measurement error? “Neighborhood effects”? Independent influence of structural aid dependence? Some combination? Other factors?

  • Perhaps surprisingly, markedly different performance records for highly “political” aid in different settings: the “story line” for Russia looks rather disappointing, while the “story line” appears more promising.

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