Allocation of aid

Ferdi contributes to the definition of aid allocation criteria by advocating the inclusion of structural factors, in particular economic and climatic vulnerability.

For around 15 years, the allocation criteria for ODA have been the subject of an intense debate, in which Ferdi has participated. Ferdi contributes to the definition of aid allocation criteria by advocating the inclusion of structural factors, in particular economic and climatic vulnerability. The positions defended by Ferdi have resonated with major development actors.

Rethinking aid allocation criteria

The debate on aid allocation criteria has been dominated by the notion of performance-based allocation (PBA), which is used by multilateral development banks. The debate relates to the balance between countries’ needs and the potential effectiveness of the aid provided. PBA assigns overwhelming weight to subjective assessments of the quality of economic policy and governance (based on various composite indicators) and very little weight to per capita income. These subjective indicators have been criticised for corresponding neither to a real performance measurement, nor to a robust indicator of aid effectiveness. Above all, they fail to take sufficient account of countries’ real needs, particularly those resulting from the structural handicaps they face.

Initially, Ferdi proposed to introduce two criteria alongside the traditional PBA indicators, namely countries’ lack of human capital (Human development Index) and their structural economic vulnerability (Economic Vulnerability Index). This combination of indicators makes it possible to take appropriate account of countries’ needs, their capacities and the potential impact of assistance. For information, these ideas have been explored in numerous Ferdi research projects over the last few years, and presented on many occasions in various parts of the world, such as Manila and Bogota (Global Development Network [GDN] conferences), New York (various events at the United Nations), Tokyo (Japan International Cooperation Agency [JICA] seminar), Washington (International Development Association [IDA] seminar), and Tunis and London (African Development Bank [AfDB] seminars).

Take vulnerability into account

It has become necessary to make the distinction between structural economic vulnerability and state fragility. Indeed, state fragility has mainly been treated as a major and largely arbitrary exception to the principle of PBA. Ferdi has presented the inclusion of structural vulnerability as a way of reconciling the principle of performance with a preventive — as opposed to purely curative — treatment for state fragility.

The debate has since been expanded to take account of climate factors from the perspective of the post-2015 agenda, in light of the growing influence that problems associated with climate change now have in developing countries. One important issue is deciding how the resources mobilised for climate change adaptation will be allocated. In this respect, several of Ferdi’s research projects have proposed the use of the Physical Vulnerability to Climate Change Indicator (PVCCI) to allocate adaptation funds on a geographical basis.

Supporting decision-making by major development actors

Ferdi’s thinking on allocating concessional finance between countries has been developed through detailed discussions with major development actors:

It has also examined specific aspects of aid allocation:

  • aimed at strengthening regional integration, through work undertaken for the AfDB, which outlines a means of providing priority support for regional integration in Africa, based on indicators of the need for countries to integrate at the regional level and their commitment to doing so;
  • taking into account physical vulnerability to climate change, using the PVCCI indicators developed at Ferdi.

 

Improving Aid Allocation for Small Developing States

Patrick GUILLAUMONT, Vincent NOSSEK, Laurent WAGNER

The level of aid received by small developing states and small island developing states (SIDS) is relatively high, considered either per capita or as...

Vulnerability Indicators for Aid Allocation

Patrick GUILLAUMONT

Any donor has a model for allocating assistance to developing countries. The model is implicit, most often so for bilateral donors, or explicit, most...

Uncertainties in Busan outcomes: Who does what ?

Patrick GUILLAUMONT B44,

After Rome (2003), Paris (2005) and Accra (2008), the 4th High-level Forum on Aid Effectiveness in Busan ended in the adoption of a “Busan Partnership...

Aid Effectiveness: Can It Be Improved?

Jan Willem GUNNING P02,

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)...

08 June 2016 to 10 June 2016 , New-York

High-Level Meeting on ending aids

United Nations General Assembly. Patrick Guillaumont introduced the side-event on financing vulnerabilities.

, Clermont-Ferrand

Visit of H.E. Gyan Chandra Acharya

Gyan Chandra Acharya is a Under-Secretary-General at the United Nations, and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States

17 September 2015 to 19 September 2015 , Helsinki

The 30th UNU WIDER Anniversary

Patrick Guillaumont was the chairman of the parallel session "The economics of foreign aid"

An Index of Physical Vulnerability to Climate Change

The Ferdi has created an Index of Physical Vulnerability to Climate Change (PVCCI), “physical” meaning that the index is independent from the current policy, making this index a potential criterion for the geographical allocation of international funds for climate change adaptation.

Internal Violence Index (IVI)

The Internal Violence Index (IVI) aims at comparing the amount of violence at the country level for 130 developing countries.

A retrospective Economic Vulnerability Index

The Economic Vulnerability Index (EVI), built by the United Nations with the contribution of the Ferdi (see LDC program), is made readily available on an updated retrospective version.

Aid selectivity indicators

The indicators of aid selectivity proposed by Sylviane Guillaumont-Jeanneney and Gwénolé Le Velly are based on the idea that the quality of economic policies of aid recipients countries must not be the unique criterion to assess the quality of aid allocation from donor countries.