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Finding the sweet spot for international aid

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The notion that multiple aid donors can be bad for developing countries, leading to corruption, unhealthy rivalry and administrative overload, is widely held. But new research from the Departments of Government and International Relations challenges the idea that countries should receive aid from fewer sources, finding that greater diversity and a larger number of donors can lead to better outcomes.

Following two decades of declining poverty and improving life expectancy, donors and recipients of development aid have committed themselves to making aid more effective, with policy-makers devoting much attention to finding the best conditions for administering aid.

Conventional wisdom contends that receiving support from a multifarious donor pool, a phenomenon described as ‘aid fragmentation’, has a number of disadvantages —  administrative burdens, greater scope for fraud, and a level of competition that can foster a counterproductive rivalry towards collective challenges. Many scholars and policymakers maintain that aid fragmentation is therefore bad for both the donor and the recipient, and advocate a system with relatively fewer, larger donors.

But according to a new study by Dr Mathias Koenig-Archibugi of the Departments of Government and International Relations, and his research partner, Dr Lu Han of the University of York, the benefits of having a variety of donors are underappreciated and can even outweigh the negative aspects of aid fragmentation.

Rather than viewing aid donors as being too many or too few, Dr Koenig-Archibugi advances the theory of a “sweet spot” in the number of donors. A large number of donors can mean the problems of aid fragmentation may emerge, while a limited number creates an unhealthy dependency on larger donors.

“We identified problems with donors having large monopolies on aid” Dr Koenig-Archibugi says. “Aid is similar to universities; the best conditions are a diversity of perspectives among both faculty and students— this results in livelier debates and enables intellectual progress.”

The researchers arrived at this finding after investigating the relationship between health aid and levels of child mortality, analysing 110 low and middle-income countries over a twenty year period. They found that having multiple donors brings higher child survival rates, with the main benefit arising from the collective wisdom borne from a range of competing views.

Dr Han says “we found countries with a moderate number of healthcare donors are more successful in improving child survival rates than countries with either few or a lot of donors.” Dr Koenig-Archibugi adds “this is a positive consequence of the marketplace of ideas, collective wisdom through dialogue. Our research finds advantages in more diversity in the donor mix, which will lead to less groupthink.”

The authors focused on testing the healthcare environment due to the complex nature of administering care; often there are significant policy differences and conflicting ideas on the best way to improve the health of children and the general population. The researchers also made a distinction between the diversity of sources and the quantity of aid in healthcare— there is debate over whether the sheer volume of aid makes a difference for the health of people in poorer countries, and research has shown that in some instances it can merely substitute for government spending. But Dr Koenig-Archibugi says that healthcare aid conveys something potentially more important than money; it exposes governments to a wide range of policy ideas, knowledge and innovation.

Dr Koenig-Archibugi adds “our work is committed to finding ways to improve the effectiveness of aid. However, the attention given to reducing aid fragmentation could be misplaced, and policy-makers may be well advised to focus on other problems, such as the tendency of governments to react to the inflow of health aid by reducing their own funding.”

The authors’ research shows that the diversity of aid sources matters in healthcare; the next research question is whether the benefits derived from the marketplace of ideas are evident across other sectors in international development.

Posted February 2016


Dr Mathias Koenig-Archibugi is Associate Professor (Reader) in Global Politics in the Department of Government and the Department of International Relations. His research focuses on the governance of global issues, especially in the area of health and labour rights, and on the possibility of democratizing global politics.

This article draws on the article draws on Aid fragmentation or aid pluralism? The effect of multiple donors on child survival in developing countries, 1990-2010 in World Development Volume 76, December 2015, Pages 344–358.

Image: Defense.gov News Photo 101022-M-9842K-158 - Victims of Super Typhoon Megi unload humanitarian aid supplies from a U.S. Marine Corps CH-46 Sea Knight helicopter in Divilacan Isabela province. Source: Wikipedia