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Evaluating the Effectiveness of Aid: Insights from World Bank Research

This report from the Development Research Group of the World Bank critically assesses the effectiveness of official development assistance (ODA). It reveals a significant decline in aid funding, highlighting that financial aid is only effective once countries implement necessary reforms. The findings suggest that ideas and policies lead to more substantial improvements than money alone, particularly in generating reform and enhancing public services. The data illustrates that despite a decrease in funding, targeted interventions in education and infrastructure can drastically reduce poverty levels in developing nations.

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Evaluating the Effectiveness of Aid: Insights from World Bank Research

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  1. Assessing AidWhat Works, What Doesn’t, and Why Development Research Group The World Bank Policy Research Report

  2. Official Development Assistance has declined by one-third US dollars, billions 75 65 55 ODA 45 1991 1992 1993 1994 1995 1996 1997

  3. Assessing Aid • Money works - once countries reform • Ideas work better than money in generating reform  improving public services

  4. Poverty and Policy,113 Developing Countries, 1996 Poor Policy Good Policy High Poverty High Poverty II I III IV Good Policy Poor Policy Low Poverty Low Poverty

  5. Poor Policy Good Policy High Poverty High Poverty II I III IV Good Policy Poor Policy Low Poverty Low Poverty Poverty and Policy,113 Developing Countries, 1996

  6. Aid tapers out with reform… when ideally it should taper in Poverty - efficient allocation Current allocation Aid (percentage of GDP) Poor policy Mediocre Good policy

  7. 25 million people 7 million people Current allocation Poverty - efficient allocation $10 Billion in foreign aid could reduce poverty by:

  8. IDA IDA and Optimal Aid Optimal aid Aid (percentage of GDP) Poor policy Mediocre Good policy

  9. Policy index Policy Mediocre Poor Zambia: Aid and Policy Aid/GDP 12 Aid/GDP 10 8 6 4 2 0 1966-69 1970-73 1974-77 1978-81 1982-85 1986-89 1990-93

  10. Assessing Aid • Money works - once countries reform • Ideas work better than money in generating reform

  11. Policy index Good Policy Mediocre Aid/GDP Poor Vietnam: Aid and Policy Aid/GDP 4 3 2 1 0 1988 1989 1990 1991 1992 1993 1994 1995

  12. Assessing Aid • Money works - once countries reform • Ideas work better than money in generating reform  improving public services

  13. One dollar in aid for rural development … raises rural development spending by 11 cents 11 cents $1

  14. Success in rural water supply projects depends on whether donors promote beneficiary participation 62 60 Did donors promote participation? 40 Percent of projects successful 20 10 0 Yes No

  15. Pakistan: School enrollment of 5-8 year old girls 100% 80% 70 60% 45 40% 20% 0 Balochistan program Pakistan average

  16. Assessing Aid • Money works - once countries reform • Ideas work better than money in generating reform  improving public services

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