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Building or bypassing recipient country systems : are donors defying the Paris declaration ?

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  • Knack, Stephen

Abstract

The 2005 Paris Declaration on Aid Effectiveness sets targets for increased use by donors of recipient country systems for managing aid. It also calls for donors to be more responsive to the quality of recipient country systems: the optimal level of their use, in terms of maximizing the development effectiveness of aid, is believed to vary with their quality. This study investigates the degree to which donors'use of country systems is in fact positively related to their quality, using indicators explicitly endorsed for this purpose by the Paris Declaration and covering the 2005-2010 period. The results of these tests strongly confirm a positive and significant relationship, and show it is robust to corrections for potential sample selection, omitted variables, or endogeneity bias. The result holds even when estimates are informed only by variation over time within each donor-recipient pair in use and quality of country systems. Moreover, donor-specific tests show that use of country systems varies positively with their quality for the vast majority of donors. These findings contradict several other studies that claim there is no relation and imply that donors in this respect are failing to live up to their commitments under the Paris Declaration. The author's interpretation of the available evidence on use of country systems is more favorable: donors'behavior over the measurement period is largely consistent with their commitments in this area. In this respect, at least, donors appear to have modified their aid practices in ways that build rather than undermine administrative capacity and accountability in recipient country governments.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6423.

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Date of creation: 01 Apr 2013
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Handle: RePEc:wbk:wbrwps:6423

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Keywords: Technology Industry; Gender and Health; Poverty Monitoring&Analysis; Microfinance; Public Sector Expenditure Policy;

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  1. Paul Clist & Alessia Isopi & Oliver Morrissey, . "Selectivity on Aid Modality: Determinants of Budget Support from Multilateral Donors," Discussion Papers 11/01, University of Nottingham, CREDIT.
  2. Knack, Stephen & Rogers, F. Halsey & Eubank, Nicholas, 2011. "Aid Quality and Donor Rankings," World Development, Elsevier, vol. 39(11), pages 1907-1917.
  3. Jonah B. Gelbach & Doug Miller, 2009. "Robust Inference with Multi-way Clustering," Working Papers 99, University of California, Davis, Department of Economics.
  4. Knack, Stephen, 2013. "Aid and donor trust in recipient country systems," Journal of Development Economics, Elsevier, vol. 101(C), pages 316-329.
  5. Frot, Emmanuel & Perrotta, Maria, 2009. "Aid Eff ectiveness: New Instrument, New Results?," SITE Working Paper Series 11, Stockholm Institute of Transition Economics, Stockholm School of Economics.
  6. Angeles, Luis & Neanidis, Kyriakos C., 2009. "Aid effectiveness: the role of the local elite," Journal of Development Economics, Elsevier, vol. 90(1), pages 120-134, September.
  7. Bjørnskov, Christian, 2010. "Do elites benefit from democracy and foreign aid in developing countries?," Journal of Development Economics, Elsevier, vol. 92(2), pages 115-124, July.
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