|About GDF||About GRIPS||Events||Publications||Downloadable Papers||GDF Members||Access|
|Good Donorship and Aid Modalities|
|Study Outline (as of Feb.9, 2004)|
Study Outline: Good Donorship and Aid Modalities (Preliminary Draft)
The GRIPS Development Forum is planning to: (i) examine criteria for considering an optimal mix of aid modalities in the country-specific context ; and (ii) draw implications for how donors can effectively assist in achieving sustainable growth and poverty reduction. It is hoped that the study outputs will serve as practical guide for recipient countries in choosing specific aid modalities and/or their proper combination, under country ownership.
More specifically, the objectives of the GRIPS study are to:
The Rome Declaration of Harmonization (February, 2002) endorsed principles of a country-based approach, country ownership and government leadership, and the need to recognize diverse aid modalities.1 At the same time, there is increased awareness of the importance of the program approach-typically, Sector-wide Approach (SWAp) and Program-based Approach (PBA)2 --in ensuring the integration of projects and budget support (and other instruments as necessary) under a shared, coordinated policy framework.
Nevertheless, practical criteria how to apply such general principles in the country-specific context is yet to be established. It is thus essential to examine a set of criteria that make budget support and project aid effective, based on case analyses, and to foster understanding of "best-mix" principles of aid modalities among recipient countries and donors.
Background and Issues
Two distinct features of the current, new aid approach--compared to traditional project aid--are: (i) the adoption of a coherent and common framework for policy and strategies; and (ii) the integration of resources and aid money. The 1990s have seen a major shift in the practices of Western and Nordic donors, and to some extent the World Bank, from project to program aid such as SWAp, PBA, and budget support (e.g., general and sector budget support). [SWAp and PBA differ from budget support in that they neither require the above (ii) nor refer to a specific aid modality. However, in sub-Sahara Africa, budget support tends to be a primary tool to support SWAp and PBA.]
The new aid approach seeks to address coordination failures among recipient countries and donors, as well as other problems associated with stand-alone projects--e.g., high transaction costs of aid delivery, donor-driven projects leading to inefficient public spending, and parallel off-budget systems undermining the effectiveness of government systems and accountability. The recent introduction of the Poverty Reduction Strategy Paper (PRSP) and the Medium-Term Expenditure Framework (MTEF) has further accelerated this shift.
This trend can be largely seen as a reaction to a growing dissatisfaction with the experiences in sub-Saharan Africa, where the socio-economic landscape had deteriorated and led to a growing isolation of donor projects from local realities, upon which the projects would make no or rather limited sustainable development impact.3 Many sub-Sahara African countries are highly aid-dependent and constrained from limited institutional capacity. Under such circumstances, the proliferation of aid projects imposes heavy administrative burden on recipient countries. Moreover, these countries face pressing needs for delivering social services to a large number of poverty-stricken population. Thus, budget support, jointly with SWAp or PBA, is expected to serve as a primary tool to finance recurrent expenditures for the social sector, build institutional capacity and policy framework, and reduce duplication of donor projects.
By contrast, East Asian countries have different experiences and perception of project aid. Project aid continues to be dominant in East Asia.4 Some (but not all) countries have managed to keep low aid dependency. This has allowed them to self-finance large part of recurrent expenditures of the social sector (as counterpart funding) and to mobilize aid resources not only for social needs but also for growth promotion including infrastructure development. Moreover, they have possessed "home-grown" systems for planning and budget management-such as development plans and sector strategies, public investment programs (although their quality may need improvements)--even before the introduction of PRSP and MTEF. This is how East Asia halved poverty during the 1990s through sustained growth-well ahead of the Millennium Declaration. These are the very, specific context in which Japan has practiced its aid, mainly through projects.
In this way, there exist different development and aid experiences among countries in sub-Sahara Africa and East Asia, and this is a main reason why some perception "gap" exists over aid approaches between Western and Nordic donors and Japan. Now that experiences with the new aid approach have been accumulated in sub-Sahara Africa and that there has been increased interest in its applicability among Asian countries, it is highly relevant to examine how and under which conditions specific aid modalities and/or their optimal combination work and to develop "best-mix" principles of aid modalities. Such principles should duly recognize: (i) country diversity (e.g., the degree of aid dependency, capacity for aid management); and (ii) the features specific to sectors and activities where aid is oriented. Also, donor efforts should be directed to help achieve sustainable impacts on growth and poverty reduction.
The findings of this study could have implications for Japan's aid policy and practices, namely, in addressing the following questions.
The study will carry out a literature review and case analyses in selected sectors and countries, and bring them together to develop practical "best-mix" principles of aid modalities. In doing so, the study will pay special attention to the following aspects:
Candidate countries for case analyses include: Vietnam, Cambodia, Bangladesh (Asia) and Ghana, Tanzania, Uganda, Mozambique (Africa). [Tentative list. Other candidates may include: Ethiopia, Zambia, Lao PDR etc.]. The study intends to cover both social sector (e.g., basic education and health) and growth promotion measures (e.g., agriculture, infrastructure, industrial development).
The study will produce various outputs, including Discussion Papers (including issues paper, thematic and country analyses), Policy Notes, and a Synthesis Report. These outputs will be disseminated through the website of the GRIPS Development Forum (http://www.grips.ac.jp/forum-e/).
Back to Main Page of "Good Donorship" (Japanese only) / Home (Japanese)
Copyright (c) 2009 GRIPS Development
All rights reserved.