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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.

Suggested Citation

  • Knack, Stephen, 2013. "Building or bypassing recipient country systems : are donors defying the Paris declaration ?," Policy Research Working Paper Series 6423, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6423
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    References listed on IDEAS

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    1. 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.
    2. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2011. "Robust Inference With Multiway Clustering," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 29(2), pages 238-249, April.
    3. Paul Clist & Alessia Isopi & Oliver Morrissey, 2012. "Selectivity on aid modality: Determinants of budget support from multilateral donors," The Review of International Organizations, Springer, vol. 7(3), pages 267-284, September.
    4. Knack, Stephen, 2013. "Aid and donor trust in recipient country systems," Journal of Development Economics, Elsevier, vol. 101(C), pages 316-329.
    5. Richard I Allen, 2009. "The Challenge of Reforming Budgetary Institutions in Developing Countries," IMF Working Papers 09/96, International Monetary Fund.
    6. Frot, Emmanuel & Perrotta, Maria, 2009. "Aid Eff ectiveness: New Instrument, New Results?," SITE Working Paper Series 11, Stockholm School of Economics, Stockholm Institute of Transition Economics.
    7. Knack, Stephen & Rogers, F. Halsey & Eubank, Nicholas, 2011. "Aid Quality and Donor Rankings," World Development, Elsevier, vol. 39(11), pages 1907-1917.
    8. 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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    Cited by:

    1. Fuchs, Andreas & Dreher, Axel & Hodler, Roland & Parks, Bradley C. & Raschky, Paul, 2015. "Aid on Demand: African Leaders and the Geography of China s Foreign Assistance," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112838, Verein für Socialpolitik / German Economic Association.
    2. repec:bla:devpol:v:35:y:2017:i:6:p:823-838 is not listed on IDEAS
    3. repec:spr:revint:v:12:y:2017:i:2:d:10.1007_s11558-017-9267-2 is not listed on IDEAS
    4. Stephen Brown, 2016. "Putting Paris into practice: Foreign aid, national ownership, and donor alignment in Mali and Ghana," WIDER Working Paper Series 145, World Institute for Development Economic Research (UNU-WIDER).

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    Keywords

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

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