Do donors practice what
they preach?
The allocation of budget support by
OECD-DAC donors
Susan Dodsworth, McGill University
Australasian Aid and Development Policy Workshop
14 February 2014
S
The puzzle
Do bilateral donors follow their own
policies when they allocate budget
support?
Why budget support? Why
bilateral donors?
• A key component of the aid effectiveness agenda:
• Involves high risk, but offers (potentially) high returns.
• Trades control for ownership.
• Donor policies identify several criteria for allocation:
• Pro-poor policies.
• Good governance (especially control of corruption).
• Respect for human rights, free and fair elections.
• Little existing research on behaviour of bilateral donors.
A two-pronged approach
Part 1: Quantitative
•
Original dataset using:
• Donor-recipient dyads.
• Budget support
disbursements.
• A two-stage analysis:
• Who gets it?
• How much?
• Problems: Limited coverage
(2010-2011), missing data.
Part 2: Qualitative
•
Semi-structured interviews
with donor officials:
• Zambia and Uganda in
late 2013, early 2014.
• 14 core interviews with
bilateral budget support
donors.
• Additional interviews
with multilateral donors
and non-budget support
donors.
Who gets budget support?
• Donors are more likely to allocate budget support:
• To countries with whom they have a colonial tie.
• To poorer countries.
• To countries where they are a ‘big’ donor.
• To countries with pro-poor spending patterns.
• To countries with good governance.
• BUT, the most influential factor is prior allocation of
budget support.
• This suggests that bureaucratic inertia is substantial.
Eligibility: Impact of
prior allocation
How much do they get?
• Donors tend to give a greater % of aid as budget support:
• To poorer countries
• To countries with pro-poor spending patterns.
• To countries with good governance.
• More aid dependent countries get (slightly) less budget
support.
• May be due to limits on absorptive capacity.
• Prior levels of budget support are very influential, but
don’t overwhelm other factors at this stage.
Amount: Impact of prior
allocations
Key points so far
• Donors follow some aspects of policies, but not others.
• Pro-poor spending and good governance attract budget
support, but their effect is not large, nor always significant.
• Human rights and democracy appear to have little impact
(but maybe we need to look at change/trends).
• Other factors also matter:
• Characteristics of donors.
• Nature of a donor’s relationship with the recipient.
• Bureaucratic inertia is important, but what does it mean?
Unpacking bureaucratic inertia
•
•
•
Mechanics of budget
support.
Desire to be a ‘good donor’
who complies with
international and bilateral
commitments.
Risk to bilateral
relationship, often
combined with the
difficultly of detecting and
measuring political change.
You make a commitment and you
sign that commitment... you have
to respect your commitments.
... not all donors are convinced
that the human rights issue has
changed. The issues might have
become more visible, but we're
not sure that the situation is so
much worse.
Is it more about donors?
• Interactions between:
• Public support for
development aid;
• The economic situation
of the donor; and
• Media coverage of
scandals and crises.
• Desire to buy a seat at the
table.
It was a big issue in the Swedish
press. And after that budget
support had a really bad
reputation... We [the Embassy]
were ready to resume budget
support towards the end of 2010,
but our Government said no.... It
was really in the media that
Zambia was the face of
corruption...
We will if they will
Decisions are interdependent,
particularly in the case of
suspensions.
• Good news: Coordination is
working (e.g. GOVNET
Framework for Collective
Responses to Corruption).
• Bad news: Statistical
methods assume
independence.
The main reason really is that
Finland tends not to go solo
anywhere. We don't see the value
in making a solo stand on almost
any issue, anywhere, because we
feel that we are a small country.
It's counterproductive and
detrimental to both parties.
Implications
• Bureaucratic inertia matters but is not simply red tape.
• The complexity of donor decision making is not reflected
by existing models.
• Need to capture interdependence and interactions.
• Donors generally abide by their own policies, but these
policies are only part of the picture.
• This may help to explain the failures of budget support.
• Is disillusionment with budget support justified? Is the
problem the modality, or the way it has been allocated?