Making aid smart: institutional incentives facing donor organizations and their implications for aid effectiveness
2002
P. Collier
Starting from the premise that allocated aid is not enough and it does not appear to be effective, this paper identifies three ways in which aid can be made smarter:by allocating it in countries with sound policies and institutionsby enabling aid to promote reform not through old-style conditionality, but through strengthening the capacity of the society to reform itselfby using it to finance basic services in the most needy environmentsAid agencies are required to be more confident and aid has to be made smarter otherwise all the efforts put so far in aid allocation will vanish. The paper suggests a list of situations where aid should be given more effectively:aid should be targeted to countries hit by sudden large drops in their export pricesaid should be allocated to post-conflict countriesaid should be targeted to those countries with reasonable economic policies and institutions, but which for other reasons faced an atypically high risk of civil conflictproject aid should be reshaped so as to be about delivering demonstration effects rather than investment per seaid agencies should attempt to promote change in difficult Environmentsaid agencies have a role in basic service delivery in the most difficult environments
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