The Foreign Aid Governance

2010

International debate on development aid is facing a major turning point. First, there has been a transition from aid for economic growth to aid for poverty reduction, from project-based aid to budget supports, from loan-centered aid to debt reduction aid and grants, and from bilateral to multilateral aid. Second, countries in Sub-Saharan Africa, which traditionally have been considered to have fallen into a poverty trap, started to exhibit sustainable growth even during the global recession following the collapse of Lehman Brothers. Third, emerging aid donor countries such as Korea, which joined the Development Assistance Committee (DAC) of the Organization of Economic Co-operation and Development (OECD) in January 2010 and became an official donor, and China, which has expanded its own aid for various reasons such as developing natural resources in Africa, have been dramatically changing the global donor map. Fourth, there is stronger collaboration between aid and private funds, and new forms of aid such as public-private partnerships (PPP) and base of the pyramid (BOP) businesses have developed, transforming the nature of ODA. In the RIETI's two Research Projects on Foreign Aid, which were undertaken 2006-2009, we conducted evidence-based policy analyses on the aid effectiveness in Asia and Africa. We also investigated donors' aid allocation behavior and the effectiveness of technical cooperation aid, and in regard to private-public partnerships in the field of development aid, the development of possible micro-insurance schemes to manage and respond to the risk of natural disaster in Vietnam. In FY2010, we will also employ the results of these various research components to (1) make a quantitative comparison of the welfare impacts of various global risks of natural and human-made disasters; (2) quantify the impact of natural disasters on household welfare using Vietnamese micro-data; and (3) examine policies on private-public partnerships related to ODA and the possibility of ODA cooperation between Japan and Korea.

2008 - 2009

International discussions on development aid have come to a major turning point. This reflects the transition from aid for economic growth to direct aid for poverty reduction, from project-based aid to budget support aid, from loan-centered to debt reduction aid and grants, and from bilateral to multilateral aid. The aim of the "Foreign Aid Governance Project" implemented during fiscal 2006-08 was to systematically identify the differences in the macroeconomic impact of aid in Asia and Africa based on available evidence, and to measure the impact of the aid allocation behavior of donors and the effectiveness of technical assistance. Using the results obtained from this research, this project will pursue the following objectives during fiscal 2009:

• (1) Basic research on developing insurance schemes to manage and cope with disaster risks through international cooperation; and
• (2) Clarification of the cause and effect relationship in the impact of aid on promoting economic growth.

2007

International discussions on foreign aid are now at a major turning point. This reflects the transitions from support for macroeconomic growth to direct assistance for micro-level poverty reduction; from project-based to budget support aid; from loan-centered to debt reduction and grant aid; and from bilateral to multilateral aid. This research project in fiscal 2006 aimed at empirically investigating the systematic differences in the macro impacts of aid between Asia and Africa. Building on the results of these macro studies, this project will extend its scope to the following areas in fiscal 2007: (1) basic research on the development of insurance schemes for the pooling of disaster risks in international cooperation; and (2) econometric impact evaluation of technical assistance aid using firm-level micro-data.

July 23, 2007 - March 31, 2011