The "Aid and global public goods" programme
The "Aid and global public goods" programme is the Ferdi’s core programme. It is underpinned by a long-standing tradition of research into development aid conducted by the CERDI, extended by an examination of the relations between aid and poverty alleviation, and broadened to cover the supply of global public goods. The programme comprises five research thrusts:
►Defining and measuring aid
►Macroeconomic effectiveness of aid
►Geographical allocation of aid
►The political economy of aid
►Analysing the impact of aid
Defining and measuring aid
There is consensus that the concept of development aid dating from the 1960s is no longer adequate. However, outside some limited adjustments to the available statistics (cf. programmable aid), the international community still reasons in terms of these older concepts. The Ferdi wishes to help rethink these concepts of aid, drawing on its own early contributions as well as more recent work on the subject. The Ferdi’s project is to help shape a new definition of aid that makes a clear distinction between budgetary cost for the provider country and the resources actually made available to the beneficiary countries, and that will identify areas of overlap between traditional development aid and contributions to the promotion of global public goods. A working group on this subject is scheduled to meet in early 2010.
Macroeconomic effectiveness of aid
To address this vast and highly controversial subject, the Ferdi is contributing to an operation steered by the CERDI and funded by the National Research Agency (ANR), to rethink the way the macroeconomic effectiveness of aid is analysed. Some work has already been done, and more is in progress in the following directions:►Analysis of thresholds in aid effectiveness
►Analysis of effects of aid given through official funding
►Analysis of the stabilising impact of aid and its consequences
►Building a general analytical framework to study the ways aid acts on the reduction of poverty
►Analysis of payments and payment deadlines
►Analysis of geographical allocation of aid and its quality (see special sub-programme below).
In addition to work carried out and published in various forms, the Ferdi has in recent months taken the initiative for several important events in this domain:
►International conference on the acceleration of payments and effectiveness of aid, organised jointly with the Presidency of the Republic of Senegal on 28 and 29 October 2008 in Dakar
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►Side Event at the United Nations Doha Conference on Financing for Development on 1 December 2008. Some 50 persons including ten African ministers and various senior international officials participated in this event on the theme “Facing the crisis, what response from the international community for low-income countries?”
►Contribution on the same theme at the joint Ministerial Forum organised by the Commonwealth Secretariat and the International Organization for the Francophonie (OIF) with a conference on “World crisis and protecting low-income countries against exogenous shocks” in April 2009 in Washington, at the spring meetings of the World Bank and the IMF.
►Presidency of a session on the same theme at a conference organised by the Club de Paris and the International Banking and Finance Institute (IBFI) of the Banque de France in Paris on 25 June 2009.
In addition to these events that enjoyed a high external visibility, two workshops were held within the framework of the National Research Agency (ANR) on issues of effectiveness, featuring contributions from some of the foremost international specialists in the field.
The results of the programme should help to temper a growing line of thought on the ineffectiveness of aid, and better identify the conditions in which aid is effective. The emphasis placed by various contributions on the stabilising impact of aid or on its effects on improving public finances reflects a major concern in the Ferdi’s work. .
Among the projects that the Ferdi is planning to carry out in response to a recommendation of the Dakar meeting on accelerating payments, is the setting up in one or two test countries of a national observatory for foreign aid, responsible for monitoring the execution of external commitments and the difficulties encountered, and analysing the sources of delays and frictions that reduce aid effectiveness. Cooperation on this subject with Development Gateway is being examined.
Geographical allocation of aid(top)
This programme, which is a complement to the programme on the macroeconomic effectiveness of aid, comprised three steps.The first step consisted in taking a critical look at the way aid selectivity is generally evaluated, i.e. the quality of the geographical allocation of different sources. This selectivity cannot be appraised solely on the basis of the supposed quality of a country’s governance and economic policy. An initial series of studies set out to propose new indicators of selectivity, with reference to a broader range of criteria, in particular structural vulnerability and low level of social development in a country. The first results were published in the journal World Economy (2007). An update will soon be online on the Ferdi website. The idea is to publish an estimate of the selectivity of bilateral and multilateral aid each year (with, of course, methodological improvements), in the same way as for the Center for Global Development’s Commitment for Development Index.
The second step consisted in an examination of the principles by which aid resources should be allocated. The three principles advanced (effectiveness, fairness and openness) led us to propose the inclusion of vulnerability and low level of social capital among the allocation criteria alongside the generally-employed criteria of governance and income. This was the theme of a report prepared for the 2008 United Nations Development Cooperation Forum (DCF) (New York, July 2008). Our proposal for the vulnerability criterion was cited in the UN Secretary General’s report for the Forum. The message was expressed again at various other international meetings:
*In a communication at the Commonwealth Ministerial Debt Sustainability Forum convened in Washington (April 2009) by the Commonwealth Secretariat and the International Organisation for the Francophonie (OIF) (the proposal was stated in the final ministerial declaration)
*At a talk given at the Barbados meeting (April 2009) of the multilateral development institutions that use an aid allocation formula
*At a seminar at the Center for Global Development in Washington (April 2009)
*In a communication at the opening of the third African Economic Conference organised by the African Development Bank (AfDB) and the United Nations Economic Commission for Africa (UNECA) in Tunis (November 2009)
*At a round table on ‘millennium goals and official development assistance’ organised by the CEPII and the OECD at their annual Paris conference (November 2009) (programme)
The third step consisted in an enquiry into how the criteria governing the allocation of African Development Fund aid could be changed to include the structural economic vulnerability of the beneficiary countries and take better account of regional integration needs. This research was conducted jointly with the research department of the African Development Bank and gave rise in particular to a working paper that the AfDB uses as an internal reference. *At a talk given at the Barbados meeting (April 2009) of the multilateral development institutions that use an aid allocation formula
*At a seminar at the Center for Global Development in Washington (April 2009)*In a communication at the opening of the third African Economic Conference organised by the African Development Bank (AfDB) and the United Nations Economic Commission for Africa (UNECA) in Tunis (November 2009)
*At a round table on ‘millennium goals and official development assistance’ organised by the CEPII and the OECD at their annual Paris conference (November 2009) (programme)
Various meetings are now planned to look at ways to promote a fair and just reform of the rules for allocating aid before the funds of the multilateral development banks are replenished. Allowance for vulnerability is a major theme on the agenda.
Research on the criteria for geographic allocation is in progress in several directions, in particular:
*The construction of an optimal allocation model that integrates the principles stated above;
*Research into ‘revealed preferences’, using methods borrowed from experimental economics to determine the weight given to the different criteria, whether by aid agency officials, by target groups in the populations of Northern countries, or by the countries receiving aid. This project, if it is accepted, will be carried out jointly with the Center for Global Development, which is hosting a Ferdi research assistant for six months partly for this purpose;
*An examination of the criteria governing the allocation of resources for adapting to climate change in low- and moderate-income countries;
*An analysis of the allocation of NGO resources, which will find a place in their evaluation project described below.
*Research into ‘revealed preferences’, using methods borrowed from experimental economics to determine the weight given to the different criteria, whether by aid agency officials, by target groups in the populations of Northern countries, or by the countries receiving aid. This project, if it is accepted, will be carried out jointly with the Center for Global Development, which is hosting a Ferdi research assistant for six months partly for this purpose;
*An examination of the criteria governing the allocation of resources for adapting to climate change in low- and moderate-income countries;
*An analysis of the allocation of NGO resources, which will find a place in their evaluation project described below.
The political economy of aid(top)
Further to the analysis of the effectiveness of global aid, the Ferdi is committed to several work programmes on the political economy of development aid, particularly multilateral aid. Two such studies have been undertaken at the request of the French government administration:
►At the request of the French Ministry of Foreign and European Affairs, an analysis was carried out on the ideas generated by the World Bank and their international influence for the assessment of governance and quality of economic policy (main author: Patrick Plane / progress report still confidential);
►At the request of the General Directorate of the Treasury and Economic Policy (DGTPE) of the French Ministry of the Economy, Industry and Employment (Assessment Office), a study was carried out on the “effectiveness of the interaction of multilateral aid”. The aim was not to compare the performance of the different multilateral bodies but to assess the effectiveness of the system formed by all the actors together in achieving results in terms of development. The study focused on the African countries of the Priority Solidarity Area (ZSP), in which France has been closely involved over the last decade. It was especially concerned with the four main multilateral institutions present in the area: the World Bank, the United Nations Development Programme (UNDP), the European Commission, and the African Development Bank (AfDB). This analysis was carried out by a team of researchers from three research centres: Jean-Claude Berthélémy from the Sorbonne Economics Center (CES), Lisa Chauvet from DIAL , and Samuel Guérineau from the CERDI. The report will shortly be made public.
The political economy of international cooperation was the subject of wide-ranging discussion surrounding the organisation of the IDGM launch conference held in Paris on 6 November 2009. Bringing together 15 high-level contributors (UN, FAO, IICT, MAE, DGTPE, AFD, Oxford, WWF, etc.) from ten different countries along with 80
participants, the conference addressed the theme ‘The bottom billion and climate change in the context of the global crisis’. It allowed in-depth exploration of two major questions: ‘Beyond the crisis, what are the issues?’ and ‘Faced with the diversity of objectives, who does what?’ The Ferdi’s Honorary President Valéry Giscard d'Estaing opened the proceedings with a talk on the future of global governance “From the G5 to the G20”.→programme (versions
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)A certain number of authors among the foremost specialists on development aid issues have, at the Ferdi’s request, agreed to present their ideas on various additional new subjects, decided on with the Foundation. These studies, all of which concern the political economy of cooperation, should arrive on the website at the rate of one a month from January onwards (signed François Bourguignon, Jorge Braga de Macedo, Paul Collier, Jan Willem Gunning, Bernard Petit, Jean-Michel Severino).
Thinking on these issues will continue, first to write up and publish the results of the work cited above, and then by initiating a theoretical approach using the instruments of game theory, and furthering the applied analysis of the role and coordination of the different actors of international cooperation.