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Measuring Aid Flows: A New Approach

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  • Charles C. Chang
  • Eduardo Fernández-Arias
  • Luis Servén

Abstract

The debate on the effectiveness of foreign aid has intensified in recent years as aid has come under increasing budgetary pressures in donor countries. Whatever the merits of the opposing arguments, the fundamental issue arises of whether conventionally-used measures of aid such as ODA, which lump together grants and loans, accurately reflect true aid flows. This paper analyzes the methodological shortcomings of conventional aid measures, and proposes a new valuation approach that measures official aid flows as the sum of grants and the grant equivalents of official loans. This conceptually superior aid measure can diverge significantly from the conventional aggregates and provide a quite different view on major aid trends.

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Bibliographic Info

Paper provided by Inter-American Development Bank in its series IDB Publications with number 6447.

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Date of creation: Dec 1998
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Handle: RePEc:idb:brikps:6447

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Keywords: Social Policy & Protection; Interest rates; Effective Development Assistance; EDA; aid flows; development assistance; ODA; Official Development Assistance; WP-387;

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  1. Demirguc-Kunt, Asli & Fernandez-Arias, Eduardo, 1992. "Burden-sharing among official and private creditors," Policy Research Working Paper Series, The World Bank 943, The World Bank.
  2. Claessens, Stijn & Diwan, Ishac & Fernandez-Arias, Eduardo, 1992. "Recent experience with commercial bank debt reduction," Policy Research Working Paper Series, The World Bank 995, The World Bank.
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