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Governance Indicators, Aid Allocation, and the Millennium Challenge Account

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Author Info

  • Daniel Kaufmann

    (The World Bank)

  • Aart Kraay

    (The World Bank)

Abstract

Aid works best when it is directed to countries with relatively good institutions and policies. But how should good governance be measured, and how can aid allocation rules be designed in light of the strengths and weaknesses of existing measures? We address in brief a number of methodological and applied challenges, motivated by the U.S. government's recent proposal to allocate resources from the new Millennium Challenge Account (MCA), the issues and recommendations apply more broadly. Among others, we discuss the implications of margins of error in governance data, the difficulties in measuring trends, and the need to complement existing cross-country indicators with in-depth country diagnostics.

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File URL: http://128.118.178.162/eps/dev/papers/0405/0405013.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Development and Comp Systems with number 0405013.

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Date of creation: 14 May 2004
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Handle: RePEc:wpa:wuwpdc:0405013

Note: Type of Document - pdf
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Web page: http://128.118.178.162

Related research

Keywords: Millennium Challenge Account; MCA; Aid Effectiveness; Aid Allocation; Governance Indicators; Governance Data;

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Cited by:
  1. Denis Cogneau & David Naudet, 2005. "Who deserves aid? Equality of opportunity, international aid and poverty reduction," Ibero America Institute for Econ. Research (IAI) Discussion Papers, Ibero-America Institute for Economic Research 110, Ibero-America Institute for Economic Research.
  2. Faria, Andr & Mauro, Paolo, 2009. "Institutions and the external capital structure of countries," Journal of International Money and Finance, Elsevier, Elsevier, vol. 28(3), pages 367-391, April.

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