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CGD’s research on aid effectiveness focuses on the policies and practices of bilateral and multilateral donors. Combining strong research credentials and high-level government experience, our experts analyze existing programs, monitor donor innovations, and design innovative approaches to deliver more effective aid. CGD research also provides insight into how policies ranging from trade to migration to investment undermine or complement foreign aid policies.
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In Navigation by Judgment, Dan Honig argues that high-quality implementation of foreign aid programs often requires contextual information that cannot be seen by those in distant headquarters. Tight controls and a focus on reaching pre-set measurable targets often prevent front-line workers from using skill, local knowledge, and creativity to solve problems in ways that maximize the impact of foreign aid.
Given the changing global landscape, development finance – rather than aid – is poised to be the future of development. The spotlight is increasingly on Development Finance Institutions (DFIs) to be catalysts in mobilizing needed financing. At a time when their record on development finance mobilization and development impact is still debated, they are nevertheless being asked to play a critical role in helping to fill huge financing gaps associated with meeting the SDGs. Several countries have established new DFIs and others are considering expanding DFI operations.
Even for countries that are far away from graduating from foreign aid, the importance of domestic resource mobilization for maintaining macroeconomic stability and sustained economic growth is well documented. A look at the experience of countries that have received HIPC debt relief validates this point and underlines the need for attaching a high priority to tax policies and practices in international assistance programs for low income countries.