Donor government transparency levels impact aid allocation

Jorg Faust’s paper released on September 2nd tests the ideas that “higher levels of political transparency – ease with which the public can monitor the government – are conducive for limiting the impact of special interests on policy-making.”

“Do Less Transparent Donors Allocate Aid Differently?” finds that political transparency in donor countries has a notable impact on how aid resources are allocated. More than half the variation between donors’ allocation of aid can be explained by how transparent they are.

From this we can see the power aid transparency can have in increasing aid allocation to where it is needed in recipient countries, and not where it will be politically beneficial for the donor.

Faust concludes that “Where political transparency is low, special interest will have a stronger impact on aid policies, which negatively affect a development-oriented distribution of scarce public aid resources. From a policy perspective, the message of this study is a confirmation for those, who request more accountability of donor governments and agencies in international development assistance. For aid to be effective, it is not only important to have “good” governance on the recipient side. As the empirical evidence in this paper has shown, the quality of political institutions deeply entrenched in donor countries also impacts on the quality of development assistance.”

A good resource highlighting another case for aid transparency. Downloadable here.

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