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Monday, April 19, 2010

Foreign Aid: International Donor Coordination of Development Assistance

Marian Leonardo Lawson
Analyst in Foreign Assistance

Just as experts have argued that greater inter-agency coordination could improve the U.S. foreign assistance program, many believe that improved coordination among donor governments and multilateral aid organizations could make global development assistance more efficient and effective. More than 30 countries and 20 multilateral organizations reported providing official development assistance in 2008. More than 150 countries received this assistance, with the United States alone providing aid to 139 countries. Most developing countries host more than a dozen bilateral and multilateral aid agencies each year, and several host more than three dozen. This diffuse aid structure, reformers 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 support improved donor coordination and consolidation of aid activities. The 2005 Paris Declaration on Aid Effectiveness established widely accepted goals for key aspects of coordination, or harmonization, as well as mechanisms for evaluating progress toward those goals. Key elements of coordination include use of common arrangements and procedures and joint missions and analysis. 

The United States has supported these donor coordination efforts, both in international forums and within the U.S. foreign assistance structure, but lacks a comprehensive strategy for donor coordination. Channeling aid through multilateral institutions is one means of coordinating with other donors. Bilaterally, the U.S. Agency for International Development (USAID) has issued field guidance calling for cooperation consistent with Paris Declaration goals; coordination officers act as liaisons between U.S. and foreign development agencies, and 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 Office of the Global AIDS Coordinator (OGAC). Several foreign aid reform bills pending before the 111th Congress, such as H.R. 2139 and S. 1524, include provisions on donor coordination as well. 

Evaluations to date indicate that little progress has been made on many Paris Declaration coordination indicators, and the United States has regressed on one indicator regarding joint field missions. This situation has been attributed to a variety of factors, including division of labor problems, political concerns about direct budget support, lack of inter-agency coordination, and personnel disincentives. Conflicting strategic interests are also a factor, with some experts arguing that the goals of official donor coordination efforts are not always consistent with the diverse objectives of U.S. foreign assistance policy. Furthermore, some have observed that official donor coordination is unlikely to have significant impact on aid effectiveness without the inclusion of increasingly significant private and emerging country donors. 

Related CRS reports include CRS Report R41173, Foreign Aid Reform, National Strategy, and the Quadrennial Review, by Susan B. Epstein, and CRS Report R40756, Foreign Aid Reform: Agency Coordination, by Marian Leonardo Lawson and Susan B. Epstein.

Date of Report: April 15 2010
Number of Pages: 25
Order Number: R41185
Price: $29.95

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