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Monday, February 25, 2013

Foreign Aid: International Donor Coordination of Development Assistance

Marian Leonardo Lawson
Analyst in Foreign Assistance

Many experts believe that improved coordination among donor governments and multilateral aid organizations could make global development assistance more efficient and effective. Proliferation of donors in recent decades, and fragmentation of aid among an increasing number of countries and projects, has increased calls for coordination. More than 45 countries and 21 multilateral organizations reported providing official development assistance (ODA) in 2010. An estimated 150 countries received this assistance in 2010, with the United States alone providing aid to 139 countries. Many developing countries host officials from dozens of bilateral and multilateral aid agencies each year. This diffuse aid structure, reformer advocates argue, leads to redundancy, policy incoherence, inefficient use of resources, and unnecessary administrative burdens on host countries.

While some observers argue that there are benefits to pluralism in foreign assistance, donors and recipients alike have expressed support for improved donor coordination and consolidation of aid activities. A series of high-level forums sponsored by the Organization for Economic Cooperation and Development (OECD) Working Party on Aid Effectiveness, between 2002 and 2011, established widely accepted goals for key aspects of coordination, or harmonization, as well as mechanisms for evaluating progress toward those goals. The United States has supported these donor coordination efforts, both in international forums and within the U.S. foreign assistance structure. Channeling aid through multilateral institutions, posting coordination officers to act as liaisons between U.S. and foreign development agencies, and increasing transparency about U.S. aid flows and objectives are part of this effort. Donor coordination provisions are incorporated into the founding legislation of relatively new U.S. aid entities, such as the Millennium Challenge Corporation (MCC) and the President’s Emergency Plan for AIDS Relief (PEPFAR). Furthermore, the 2010 Quadrennial Diplomacy and Development Review (QDDR) established donor coordination and reduced fragmentation as foreign aid priorities.

Despite the global attention paid to the issue of aid effectiveness, monitoring surveys indicate that limited progress has been made toward coordination goals by the United States or donors in general. Persistent obstacles to increased donor coordination remain. Division of labor problems, political concerns about direct budget support, lack of inter-agency coordination, and personnel disincentives all play a role. Perhaps most important, the goals of official donor coordination efforts are not always consistent with the diverse objectives of U.S. foreign assistance policy or those of other bilateral donors. Nevertheless, traditional donors renewed their commitments at the Busan High Level Forum in November 2011, while at the same time expanding the scope of coordination efforts to include emerging donors, such as China and Brazil, and civil society organizations. A new entity conceived at the Busan forum, the Global Partnership for Effective Development Cooperation, was established in 2012, with the support of the United States, to embody this new, broader framework for cooperation.

Related CRS reports include CRS Report R40213, Foreign Aid: An Introduction to U.S. Programs and Policy, by Curt Tarnoff and Marian Leonardo Lawson, and CRS Report R42621, State, Foreign Operations, and Related Programs: FY2013 Budget and Appropriations, by Susan B. Epstein, Marian Leonardo Lawson, and Alex Tiersky.

Date of Report: February 5, 2013
Number of Pages: 29
Order Number: R41185
Price: $29.95

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