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A worm’s eye view of aid architecture….

This article explores the gaps and challenges in aid architecture reform beyond the Paris Agenda, highlighting the importance of subsidiarity, building effective partnerships, aid agency incentives, competition versus collaboration, and balancing aid allocations. It also discusses alternative aid instruments, mutual accountability, and the need for a liquid reserve fund across donors.

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A worm’s eye view of aid architecture….

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  1. A worm’s eye view of aid architecture…. Gaps and Challenges for Reform beyond the Paris Agenda Andrew Rogerson, Overseas Development Institute

  2. Framework • Subsidiarity principle • Paris agenda and its results • A word on aid agency incentives • “Competition” or “Collective Action” • 5 supra-national policy steps

  3. Subsidiarity principle • Assume perfect harmony locally • Derive minimum changes globally • Example: fragmentation • Example: predictability • Example: global public goods

  4. Paris Agenda and implicit results framework • The Aid Effectiveness Pyramid • Seven Habits • Different country perspectives • Transaction costs and their limitations

  5. Building partnerships that make aid more effective Ownership Partners set the agenda Reliance on partners systems Alignmenton partners’ priorities Alignment Sharing information Simplification of procedures • Commonarrangements Harmonisation

  6. An alternative results framework • Aid tail and domestic finance dog • (More downward accountability) • Input= institutional change • Output= “better” resource management • Outcome link= Institutions-> poverty • But: Transplants? Causality? Proof?

  7. Aid Agency Incentives • Preferences Diverge (trust, information) • Agencies Mediate • Conditions and commitment Devices • Transaction costs versus uncertainty • Perfect trust and staff incentives

  8. Competition vs Collaboration • Increasing , but low fragmentation • Cartel view and risks vs costs • Unilateral action by recipients • Unilateral action by donors • Exhortation or financial pressures?

  9. Five complementary actions • Balancing cross-country aid allocation • Matching predictability and results • Raising resources for ambitious PRS • Mutual accountability and sanctions • Code of conduct for “vertical” funds

  10. Balancing Allocations • Problem: bilateral aid objectives diverge • And: multilaterals performance based • Therefore: donor darlings and orphans • Rebalancing via multilaterals, IFF

  11. Alternative aid instruments • Recipient : longer horizon, risk spread • Donor: tangible results • MDG outcome-based programs • Large-scale recurrent cost support • Verifiable outputs and outcomes

  12. Mutual Accountability • Correcting basic asymmetry • Assessing donor performance (eg DRI) • Value at country level (Mozambique) • But also need incentives/sanctions • Market-based, eg IFF, discipline • Unbundling aid funding and delivery

  13. “it’s the money, stupid” • PRS closed on needs or availability? • Too slow, not transparent adjustment • Sachs: fast-tracking several countries • But individual donor funds do not clear • Need liquid reserve fund across donors

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