Recommended readings
The forgotten states: aid volumes and volatility in difficult partnership countries (1992-2002)
Aid allocations in difficult partnerships
Authors:
V. Levin; D. Dollar
Publisher:
OECD DAC's Joint Learning and Advisory Process on Difficult Partnerships , 2005
Difficult partnership countries (DPCs) are countries with weak policies and institutions, some of the most difficult environments for aid programmes, although they are also amongst the poorest countries. This paper summarises the findings of data analysis conducted for the DAC Learning and Advisory Process on aid allocations in difficult partnerships. The analytical framework is divided into three categories of literature. The first is existing aid effectiveness studies, which emphasise a strong policy and institutional environment in aid-receiving countries as necessary for converting aid income into economic growth and poverty reduction. The second is the more recent work performed on post-conflict aid, which indicates that post-conflict countries may have higher aid absorption capacity than other countries at similar poverty and institutional levels. The third is the literature on aid volatility, which suggests that the beneficial effects of aid can be offset by high volatility and unpredictability, dependent on the degree of aid dependency of the recipient country.
The authors argue that DPCs do receive less aid than more strongly performing countries. However, this relationship is not continuous with their population, poverty and performance. The authors show that there are substantial differences within the DPC group. Post-conflict DPCs receive higher amounts. The authors also provide an analysis of post September 11 pledges and show that this gap appears to be increasing. The authors find that DPCs experience much higher aid volatility than other countries receiving aid. The authors find that in addition to their high aid-dependence, DPCs are by definition very weak capacity countries. The duration needed for any aid-financed programme to produce results is likely to be longer than in a country with similar poverty levels but stronger institutions. Turning the tap of aid on and off frequently may therefore be the wrong way to achieve the results donors are looking for.
