Kiel Working Papers, Kiel Institute for World Economics
No 1266:
Sectoral Aid Priorities: Are Donors Really Doing their Best to Achieve the Millennium Development Goals?
Rainer Thiele, Peter Nunnenkamp and Axel Dreher
Abstract: We analyze the aid portfolio of various bilateral and
multilateral donors, testing whether they have prioritised aid in line with
the Millennium Development Goals (MDGs). In doing so, we combine sectorally
disaggregated aid data with indicators reflecting the situation of
recipient countries regarding the MDGs. Our results show that donors differ
not only in terms of their overall generosity and the general poverty
orientation of aid, but also in the extent to which their sectoral aid
allocation is conducive to achieving more specific MDGs such as all
children completing a full course of primary schooling, reducing child and
maternal mortality as well as reversing the spread of HIV/AIDS. Overall,
while some MDGs, e.g., the fight against HIV/AIDS, have shaped the
allocation of aid, the sector-specific results reveal that with respect to
other MDGs, most notably primary education, there is a considerable gap
between donor rhetoric and actual aid allocation. These results invite the
conclusion that the current focus on substantially increasing aid in order
to turn the tide in trying to achieve the MDGs misses one important point:
Unless the targeting of aid is improved, higher aid will not have the
desired effects. Our results suggest that at least part of the blame for
missing the MDGs falls on insufficient targeting of aid.
Keywords: Aid Allocation, MDGs, Development Aid; (follow links to similar papers)
JEL-Codes: F35,O11,O19; (follow links to similar papers)
36 pages, January 2006
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