Recipient governments' willingness and ability to meet aid conditionality: The effectiveness of aid finance and conditions

This paper evaluates aid both by considering the evidence on aid effectiveness in promoting growth and by considering how effective has aid been in exerting leverage on policy choices. We argue that in both respects aid has had beneficial effects. It is rather easy to demonstrate that if a country is unwilling to implement policy reforms, attaching conditions to aid will not ensure sustained reform. In this sense conditionality does not work. This ignores the fact that donors, through aid and conditions, can influence recipient policies. The argument of this paper is that if the analysis focuses on channels of influence, one can better identify ways to enhance aid effectiveness. We argue that reform is a slow and difficult process and donors would be more effective ‘development partners’ if they see their role as being to support rather than force this process. In simple terms, donors should provide the information and technical assistance to help governments to make policy choices, rather than dictating choices by imposing conditions.