How Selective is Donor Aid? Governance and Corruption Matter and Donor Agencies Should Take Notice

Over the years, bilateral and multilateral donors have become increasingly concerned about delivering more effective aid. The determinants of successes and failures in development assistance are varied and complex; yet, experience and analysis point to weak and corrupt institutions as important contributing factors to poor outcomes. Examples of failed projects due to mismanagement and corruption include the Morogoro Shoe Factory in Tanzania during the 1980s, and more recently, heath sector projects in India and the oil pipeline in Chad. It is therefore important to ask whether donor aid has become more selective over the years. There certainly have been declarations and explicit writings about the need for greater selectivity, and some donors have implemented internal procedures to address the issue. But have these declarations and procedures resulted in increased sensitivity to misgovernance and corruption in recipient countries? In a forthcoming Brookings research report, we explore these and related questions. See full Article.