Rethinking the criteria for aid allocation

Rethinking the criteria for aid allocation
FERDI is a major actor in the debate about aid allocation criteria based on the search for a balance between countries' needs and the potential effectiveness of aid.

Performance-based allocation (PBA) gives a dominant weight to the subjective assessment of the quality of economic policy and governance (through different composite indices) and a lower weight to the objective indicator of per capita income. 

These subjective indices have been widely criticized, because they are neither a true measure of performance nor a robust element of aid effectiveness. Above all, they do not take sufficient account of the real needs of countries, particularly those facing structural handicaps.

FERDI proposes to introduce different criteria in addition to the traditional performance-based allocation indicators.

FERDI has proposed introducing other criteria in addition to the traditional performance-based allocation indicators. These criteria are level of human capital, structural economic vulnerability, vulnerability to climate change, and the socio-political vulnerability reflected in internal violence and the risk of violence. This set of indicators makes it possible to take account of countries' needs, capacities, and the potential impact of aid. 

These ideas are now at the heart of the concerns of the main multilateral donors who face the increasingly pressing issue of state fragility in the allocation of concessional aid funds. 

Results and Impact

FERDI, through its historical influence linked to this debate, now has an undeniable international reputation on these issues, which enables it to be regularly solicited for its expertise: 

  • FERDI was a major stakeholder in the reform of the aid allocation model of the European Commission's 11th European Development Fund. (Read: Methodology for country allocations: European Development Fund and Development Cooperation Instrument 2014-2020)
  • The African Development Bank asked FERDI to support its aim of reforming how it allocates aid from the African Development Fund so as to take into account the various causes of vulnerability and fragility
  • FERDI's paper entitled Measuring Official Development Assistance, Why and How to Change? was ranked as among the 50 best studies on public policies in the Global Go To Think Tank Index Report 2014.

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