” ‘aid’ theory “

Yesterday I stumbled over an article called “Fungibility and sloppy thinking” by Owen Barder, which I found to be just brilliant. It’s not the

easiest read but hang on, it’s worth it. The article is written in 2010 but nevertheless HIGHLY topical; perhaps especially in a Swedish aid and development debate context.

 

 

Donors should be asking themselves two questions:

  1. Has the aid we have given arrived and been used as expected? Being able to answer this is part of donors’ fiduciary responsibility to ensure that public money has been used for the purposes intended.
  2. What are the wider consequences of this aid, including possible changes to how the beneficiary community uses their own resources?  Being able to answer this is important for ensuring that aid is used well, and it is part of donors’ fiduciary responsibility to ensure that aid is achieving good value for money.

A problem arises when these two distinct questions get mixed up.  We can be satisfied that our aid has arrived and been spent as we intended even if the beneficiary community has made offsetting adjustments to its own resource use.  (This is equivalent to knowing that the painting I bought for my partner really is hanging on the wall, even though I also know that the consequence of my having bought it is that she has bought an ornament.)  This interpretation of ensuring that our money has been used as intended is consistent with common sense and everyday usage, and it is consistent with donors’ fiduciary responsibilities.

This does not mean that we should be satisfied merely with knowing that our money has been spent as planned.  Donors have both a social and a fiduciary responsibility to ensure that aid achieves good value for money.  We should be interested – much more than we have been in the past – in the broader, long-run consequences of our actions.

There are many possible ways in which aid can have indirect effects which are not sufficiently taken into account in assessing whether to give aid, how to give aid, and for what purposes.  There may be effects on institutional capacity, exchange rates, relative prices, firms, domestic politics, power relationships and social attitudes.   The likelihood of domestic resource reallocation as a result of receiving aid is one among many indirect effects that ought to concern us when we provide foreign assistance, though it is probably not the most important of them.

Donors should be asking themselves two questions:

  1. Has the aid we have given arrived and been used as expected? Being able to answer this is part of donors’ fiduciary responsibility to ensure that public money has been used for the purposes intended.
  2. What are the wider consequences of this aid, including possible changes to how the beneficiary community uses their own resources?  Being able to answer this is important for ensuring that aid is used well, and it is part of donors’ fiduciary responsibility to ensure that aid is achieving good value for money.

A problem arises when these two distinct questions get mixed up.  We can be satisfied that our aid has arrived and been spent as we intended even if the beneficiary community has made offsetting adjustments to its own resource use.  (This is equivalent to knowing that the painting I bought for my partner really is hanging on the wall, even though I also know that the consequence of my having bought it is that she has bought an ornament.)  This interpretation of ensuring that our money has been used as intended is consistent with common sense and everyday usage, and it is consistent with donors’ fiduciary responsibilities.

This does not mean that we should be satisfied merely with knowing that our money has been spent as planned.  Donors have both a social and a fiduciary responsibility to ensure that aid achieves good value for money.  We should be interested – much more than we have been in the past – in the broader, long-run consequences of our actions.

There are many possible ways in which aid can have indirect effects which are not sufficiently taken into account in assessing whether to give aid, how to give aid, and for what purposes.  There may be effects on institutional capacity, exchange rates, relative prices, firms, domestic politics, power relationships and social attitudes.   The likelihood of domestic resource reallocation as a result of receiving aid is one among many indirect effects that ought to concern us when we provide foreign assistance, though it is probably not the most important of them.

Read the full article here >>

 

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