Multiple objectives often work against each other and weaken each other so that

Multiple objectives often work against each other and

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Multiple objectives often work against each other and weaken each other, so that aid may end up serving none of its multiple goals especially well. The governments of the poor countries, through which the aid is directed, often have little incentive to raise the productive potential of the poor, especially when doing so might engender political activism that threatens the current political elite. The aid agencies themselves in this difficult environment do not have much incentive to achieve results, since the results are mostly unobservable 19.2 Ways to improve the success of foreign aid projects Conditionality o Aid agencies often place conditions on loans and aid o These conditions typically include macroeconomic stability (low-budget o deficits and inflation), noninterference with market pricing, privatization of stateowned enterprises and openness to international trade. o However, the agencies then often provide additional future loans with little regard for the performance on previous loans. o A common reason for aid to be given even after conditions are violated is that with high political instability, a new government took power and was given a clean slate by the aid agencies. o But there are a number of cases where aid was given repeatedly even to the same government in the same country. o the fundamental problem remains that both the success of past aid to follow conditions and the failure of past aid to follow conditions are both taken as justifications for future aid. Evaluation o Despite the potential benefits of learning from past experience, aid agencies seem reluctant to promote honest evaluations that could lead to publicity about failures. o Aid agencies typically give low priority to evaluating projects after completion. o The World Bank reviews only 5 percent of its loans after three to ten years following the last disbursement for development impact o Even these evaluations are based in part on self-evaluations by the staff in charge of the original projects and their implementing agencies, are done on a paltry budget, and are often sanitized as they are reviewed by management o Increasing evaluation of the aid agencies need not be especially costly. In some cases, it may involve little more than specifying concrete and measurable objectives (not the dispersal of money) in advance. In other cases, case study information can be made available to outside scholars 19.3 Realistic Vision Aid agencies should set more modest objectives than expecting aid to "launch the takeoff into self-sustained growth. The goal of having the high-income people make some kind of transfer to very poor people remains a worthy one, despite the disappointments of the past. But the appropriate goal of foreign aid is neither to move as much money as politically possible, nor to foster societywide transformation from poverty to wealth.
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