Aid Dispersion: Measurement in Principle and Practice

Abstract

Excessive dispersion of development assistance has been high on the Paris Agenda on aid effectiveness. However, there is no agreement in the existing literature on how aid dispersion should be measured and few studies of the extent of the problem. We argue for using the Theil Index for both recipients and donors. This relative inequality measure has a major advantage: it allows for a perfect decomposition into variation between and within entities. Exploiting this property, we can rank official donors and recipients not only in terms of the total spread, but also assess the contributions of geographic and sectoral dispersion. We provide a detailed picture of developments along various dimensions (globally as well as for countries, income groups, and regions, over 1998-2013). We further distinguish between bilateral and multilateral donors. Consistent with other studies using more limited samples, we find little effect of the Paris Agenda overall. Aid is more fragmented in Sub-Saharan Africa and in the poorest countries. Globally as well as for most donor and recipient countries, between variation is the main driver of the spread, lending support to the geographic concentration policies many donor countries have adopted. Bilateral aid has been somewhat more dispersed than multilateral aid and in both cases the large number of donors controlling similar shares of total funds is a major driver of the total spread. The latter suggests that concentration could also be achieved through a reduction of the number of actors on the donor side of the aid industry, a perspective that previous studies using other measures have been unable to capture.

Losing concentration? Lessons from a Swedish aid policy reform

“…In other words, the big picture is that there is no change in the degree to which Sweden proliferates. Indeed, Fløgstad & Hagen () find that the increase in the Swedish Theil from the first (1998–2005) to the second (2006–2013) half of the sample period is not statistically significant. It follows that the same is true for the smaller increase after the policy reform.…”

“… However, in joint work with Cathrin Fløgstad I have now extended the analysis to all DAC donors, multilaterals, and recipients for which data exists (Fløgstad & Hagen, ). …”

“…Moreover, gauging dispersion for individual multilateral institutions is not as informative, as many of them have mandates limiting their geographic or thematic spread. Still, their aggregate contribution is of interest and Fløgstad and Hagen () compute it.…”

“…| THE DATAIn the literature on aid allocation it is common to use commitments, as they are assumed to reflect donors' intentions better. Disbursements can vary for a number of reasons, including factors beyond 2 However, in joint work with Cathrin Fløgstad I have now extended the analysis to all DAC donors, multilaterals, and recipients for which data exists(Fløgstad & Hagen, 2017).…”

Smallholder agricultural finance in Nigeria: The research gap

“…Furthermore, the term agricultural finance was furthermore classified on their repayment rate based on the provider of the finance (Table 3). A major characteristic of all the papers reviewed highlighted that agricultural finance involves the provision of finance, or otherwise referred to as credit, to smallholder farmers, either on a short term, medium term or long term basis (Central Bank of Nigeria, 2018;Valentina et al, 2015) for use on the farm, while the second main characteristic of the reviewed articles identify that farmers have the obligation to repay the fund at a later date (Afolabi, 2010), except where the fund is identified as grant or aid which requires no repayment (Fløgstad and Hagen, 2017).…”