Are Emerging Donors Engaging in Poor Foreign Aid Practices? A Comparison of Traditional Versus Non-Traditional Aid Agencies

Abstract

Despite the rapid growth of emerging donors, these non-traditional donors are historically left out of the discussion on aid effectiveness. In this paper, we provide the first full evaluation of aid agency best practices. We rank and compare DAC (Development Assistance Committee) donors, emerging non-DAC donors, multilateral, and UN agencies in the following five best practice categories: transparency, overhead costs, aid specialization, selective allocation, and effective delivery channels. Contrary to the impression that emerging donors engage in worse practices, we find that non-DAC agencies rank similarly to DAC donors: both groups are equally poor performers. Emerging donors engage in less aid fragmentation and do not use ineffective delivery channels. Traditional DAC donors, however, are more transparent. Overall, we find that multilateral agencies and UN donors outperform both DAC and non-DAC bilateral agencies. Collectively, our results suggest that most aid donors do not meet their own standards for best practices, and this finding is not unique to emerging donors. We highlight how our results reflect the broader political economy of aid allocation.