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How Political Transparency Effects Aid Distribution

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Jorg Faust has just released a new paper on political transparency and how this can impact how aid is allocated. The idea is that ‘foreign aid is more effective for development if it’s allocated to relatively poor recipient countries’ with relatively sound political institutions’. However, this is not always the case.

Instead, aid allocation has often diverged from this rule because donor governments and other agents pursue special interest politics (e.g. see proposals from UK Department for International Development that ‘security considerations are placed at the heart of aid projects’).

The paper looks at the ‘variance of aid allocation patterns to different levels of political transparency within donor countries’ and concludes that:

Where political transparency is high, donor governments are more accountable and have less maneuvering space to diverge from technocratic expertise and citizen’s preferences.

It notes how (my emphasis below):

Donor countries with higher levels of political transparency allocate aid more according to recipient countries’ neediness and institutional performance…

Even when controlling for several other potential explanations, political transparency in donor countries has a significant impact on how they allocate their resources for development assistance.

Thus the results of this study underline the argument, that development assistance like other social policies is not a simple altruistic undertaking but a policy field with many vested interests, institutionalized over the past decades. Where political transparency is low, special interest will have a stronger impact on aid policies, which negatively affect a development-oriented distribution of scarce public aid resources. From a policy perspective, the message of this study is a confirmation for those, who request more accountability of donor governments and agencies in international development assistance.

For aid to be effective, it is not only important to have “good” governance on the recipient side. As the empirical evidence in this paper has shown, the quality of political institutions deeply entrenched in donor countries also impacts on the quality of development assistance.

PublishWhatYouFund (a coalition of development organisations campaigning for Global Aid Transparency) concludes that:

From this we can see the power aid transparency can have in increasing aid allocation to where it is needed in recipient countries, and not where it will be politically beneficial for the donor.

The study highlights the power and impact of political transparency, and how this can impact the flow of aid to developing countries. It provides evidence of how higher levels of political transparency can lower levels of corruption, and reduce the impact of special interest groups in policy-making on foreign aid.

Fore more check:

(H/T Publish What You Fund)

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