Governance and management for better aid effectiveness: a donor country’s perspective

Abstract

This study examines aid effectiveness from a donor’s perspective. The vast majority of discussions on aid effectiveness have been devoted to whether or not recipient countries possess various aspects of capacity to make aid programs effective. Since a donor country makes the first decision on how and where aid should be disbursed, donor countries also bear comparable responsibilities for aid effectiveness. Analyzing whether aid effectiveness, as represented in the Organization for Economic Co-operation and Development’s Development Assistance Committee principles, is under the influence of the aid management system and governance of donor countries, the results of this empirical study show that both factors affect aid effectiveness. In particular, the empirical results imply that donor countries where, aid agencies are housed as a development cooperation department within a Ministry of Foreign Affairs on the one hand and which have a stronger capacity to control corruption on the other tend to follow the international principles of aid effectiveness which, in turn, enable them to improve aid effectiveness.