Aid, public expenditure and Millennium Development Goals: is collaboration possible?

Is public expenditure in developing countries inefficient and biased against the poor? How could better aid delivery enhance the likelihood of achieving Millennium Development Goals (MDGs)? What changes are required in current patterns of public expenditure and monitoring and in donor-recipient relations?

Research from the Overseas Development Institute’s Centre for Aid and Public Expenditure (ODI/CAPE) asks how good the record of public expenditure has been in developing countries in delivering two key MDG targets – universal primary school education and a two-thirds reduction in child mortality by 2015.

While most children in the majority of developing countries – but not in much of sub-Saharan Africa – now attend the first year of primary school, large numbers subsequently drop out. About 113 million children, 18 per cent of the school age sector in developing countries, were out of school in 1998. Regional differentiation in progress towards universal primary education is growing. In sub-Saharan Africa, gross enrolment rates have remained static since 1980.

International comparisons of expenditure and achievement in health and education reveal that:

• Cross-country statistical evidence of the effect of public expenditure on MDG education and health targets – primary school completion rates and child mortality rates – is weak or insignificant.
• There are major variations within and between countries in the efficiency of public expenditure programmes.
• There is serious inequity in the distribution of public subsidies for primary education – the poor receive less expenditure per pupil than the better off and they also receive a poorer education.
• The income-poor have distinctly worse health than the rich: overall child mortality rates in developing countries remain twice as high for the bottom 20% in terms of income as for the top.
• Households, including the poor, are willing and to some degree able to pay for routine healthcare. The livelihoods of the poor are most threatened by catastrophic illness, the treatment of which they cannot afford.
• Public expenditure on health does not give sufficient priority to interventions where it can do the most good, such as childhood and epidemic disease control.
• Primary healthcare initiatives have often been poorly focused and under-resourced, especially in rural areas.

The main challenge in attaining the MDG target in education lies in enrolling children now out of school and discouraging early abandonment, particularly by the children of poor parents. According to country circumstances, there needs to be greater attention to economy and efficiency in public expenditure management, reallocation of resources within the education sector in favour of primary schools, reallocation of budgeted public expenditure in favour of education and the mobilisation of additional resources from donors. In health there is similar scope for a reallocation of public expenditure within the sector towards pro-poor and high impact programmes.

The report calls on donors working with states at risk of failing to meet MDG targets to:

• base their programmes and conditionality on national poverty reduction strategies
• build local capacity for policy, implementation and accountability
• make their assistance predicable via multi-year framework agreements for budget- or pooled-sector support for public expenditure programmes
• use partner-government budgeting, accounting, monitoring and procurement systems wherever possible
• maintain a close relationship with country authorities at the sector level while using support for the national budget as the main vehicle for financial transfers
• encourage performance-based public expenditure planning and management, to complement PRSP monitoring and to make expenditures more efficient and more effective in delivering PRSP objectives.

Source(s):
‘Can we attain the Millennium Development Goals in education and health through public expenditure and aid?’, ODI Briefing Paper, by John Roberts, April 2003 Full document.
‘Poverty Reduction Outcomes in Education and Health’, ODI Working Paper 210, by John Roberts, March 2003 Full document.

id21 Research Highlight: 10 October 2003

Further Information:
John Roberts
Overseas Development Institute
111 Westminster Bridge Road
London SE1 7JD
UK

Tel: +44 (0)20 7922 0300
Fax: +44 (0)20 7922 0399
Contact the contributor: j.roberts@odi.org.uk

Overseas Development Institute, UK

Other related links:
'Meeting education development goals: simply a question of money?'

'New solution? Can a sectoral approach to education meet international targets?'

'Can it be done? Prospects for improving health of the global poor'

'Water and sanitation goals: Is progress in the pipeline?' Insights #45

'Escaping poverty: Can policy reach the chronically poor?' Insights #46

See more on the MDGs from UNDP

ADB provides further information on the MDGs