A bottom up approach to aid reform

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Paolo de Renzio and Andrew Rogerson of the Overseas Development Institute argue in Power to Consumers? A bottom up approach to aid reform that for all the fuss about harmonizing aid efforts, competition can be helpful and is a more productive way out of chaos and fragmentation. They propose, for example, that before any donor agency can receive funds from the proposed International Financing Facility, they must be sufficiently highly rated by recipient countries.

Paolo also writes at the new ODI blog, pointing out that staff in donor agencies have little incentive to do much more than pay lip service to harmonization, and that

Aid quality and aid effectiveness require a system that forces donors to improve the ways in which aid is delivered, and that will only happen when more voice and more choice are given to recipient countries in terms of influencing the decisions around the aid that they receive.

Needless to say, The Market for Aid book is the place to read my own take in full, but while there are sensible harmonization measures available, the aid industry will only become more fragmented and we need to work out how to turn that problem into an opportunity.

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