The allocation of development aid

Written on June 6, 2007 by Max Oliva in Development

J.Pozuelo-Monfort, MSc candidate in economic development at LSE.
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In today’s world the individual citizen is demanding. Public and private services are conceived from the point of view of a demanding citizen. Products are manufactured from the point of view of a demanding consumer and must fulfill a minimum standard of quality. In today’s world the investor is demanding. The investor demands that the public firm that he or she has invested in be managed appropriately, and fulfill his or her expectations, improving the financial return of prior years.
Think of how a donation is administered. Think that oftentimes the donor does not trust how a donation will be allocated, what impact it will have on the society in the first or third world, and in any way he or she is able to find out whether that donation was invested according to what was promised, and he or she is not able to track down what sort of economic and social return the donation brought about. The problematic of aid has been how to invest the dedicated funds, that oftentimes are scarce. A Ministry, an NGO, any type of organisation that administers third party’s funds has the obligation and the responsibility to inform the donor about the final destination of his or her funds, about what type of economic or social return they have generated. The donor, at the same time, if not content with the outcome, should carefully review to whom devote his or her donation as a function of a report of activities of a Ministry, an NGO.
The secret of development aid is to delink it from the purely governmental and institutional allocation that we are used to. An allocation that usually does not know the real problems of a country, a city, the population segment it is meant to, and usually focuses on solving other issues more related to macroeconomic and budget policies of a developing country, and oftentimes focuses on financing projects of doubtful social impact such as the construction of energy plants or the acquisition of weaponry. Development aid should be administered by a universe of organisations which activity is monitored carefully, a set of organisations which activity is audited, so that whenever the slightest indication of funds mismanagement is noticed, the organization involved is penalized and the funds it manages withdrawn and allocated to someone else. Development aid must in principle be devoted to compensate for the lack of basic services to which every human being has the right to access: education, healthcare, water and sanitation.
The mission of the Public Administration is to raise funds and allocate them competitively among organisations established in areas which poverty is to be tackled. Delinking the aid management from the governmental or institutional level is equivalent to making it independent from foreign policy agendas, that are oftentimes unrelated to the poverty scenarios that are meant to be solved.


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