The Future of Development Assistance: A Market for Aid?

November 4, 2006 12:35pm CST
The ever-shifting debate over the aid industry and the right way to help the world's poor has acquired new focus. There is a new, overdue, and welcome focus on measuring results. It is no longer enough to point, with pride or with criticism, at the raw volume of money transferred. Many challenging questions must be addressed so that important development goals can be met. What has been the performance of donors and which recipients make the best use of aid? Should emphasis be placed on improved monitoring or lowering transaction costs? Will the impact of increasing competition and fragmentation within the aid industry combine with decreasing poverty levels to stimulate new forms of cooperation within the industry? Will remittances and nongovernmental aid flows dominate the industry in the future? Which development agency will be the first to close its doors declaring mission accomplished? And what form should aid take: grants, loans, or something else? The aid industry is changing, forcing donors and recipients to adapt accordingly to help those most in need. While the challenges are considerable, the future presents an opportunity for harnessing competition to improve performance and help the poor. Discussion Questions How can the private sector be creatively included to improve aid effectiveness? How can the benefits of competition between donors be maximized, while minimizing costs? What should be the future role of the international financial institutions such as the World Bank and new actors and commentators such as The Gates Foundation, Jeffrey Sachs and Bono? Can new performance evaluation methods and experiments be tested in order to improve current aid models? What new programs are needed - from lending to municipal governments or small businesses, to funding global programs fighting malaria or climate change and which organizations are best placed to deliver them?
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