Getting to Scale: How to Bring Development Solutions to Millions of Poor People

3. From Scaled-Up Budgets to Scaled-Up Impact: A Decade of Rising Foreign Aid in Review

69 3 From Scaled-Up Budgets to Scaled-Up Impact: A Decade of Rising Foreign Aid in Review laurence chandy I very much welcome—as should we all—the recent decisions by President Bush and the European Union to boost aid spending. . . . But we must not stop there. This is not just about resources. It is about scaling up—moving from individual projects to programs, building on and then replicating, for example, microcredit for women or community-driven development, where the poor are at the center of the solution[,] not the end of a handout. —James Wolfensohn at the Monterey International Conference for Development, March 2002 The first decade of the twenty-first century saw a rapid increase in official aid flows (figure 3-1). From 2000 to 2010 net annual official development assistance (ODA) from countries of the Development Assistance Committee of the Organization for Economic Cooperation and Development (OECD DAC) and multilateral agencies increased over 60 percent, from $78.7 billion to a new record of $128.5 billion (2010 prices). Measured as a share of member countries’ economic size, aid in 2010 reached its equal highest level since 1992, at 0.32 percent of OECD DAC gross national income. This resulted in an extra $278 billion of aid for developing countries, over and above 2000 levels. This is 70 Laurence Chandy consistent with the lower range of costing estimates for the achievement of the Millennium Development Goals.1 It almost certainly underestimates the growth of global ODA, since aid from non-OECD DAC donor countries is believed to have risen at a faster pace than OECD DAC aid.2 While there were various motivations for this increase in aid, among them was a desire to spur faster development and poverty reduction by, inter alia, systematically expanding the delivery of basic services to poor populations and financing the replication of other interventions that had achieved demonstrable success at a limited scale. In other words, scaled-up aid volumes would finance the scaling up of development impact. With the expectation that the period of rising aid flows is now likely over following a drop of OECD DAC aid flows in 2011, now is a good time to take stock of the preceding period.3 This chapter attempts to bridge the two notions of scaling up by examining to what extent increased aid volumes were used to support the scaling up of development impact. In doing so, it seeks to shed light on the relationship between these two related, but separate, agendas. 1. For a range of estimates, see Atisophon and others (2011). 2. Park (2011). 3. For details of the drop in aid flows, see DAC (2012). Figure 3-1. Official Development Assistance, OECD DAC Countries and Multilateral Agencies, 2000–10 Billions of constant 2010 U.S. dollars Source: OECD (2012a). 120 100 80 60 40 20 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 From Scaled-Up Budgets to Scaled-Up Impact 71 To definitively answer this question would require a level of analysis far beyond the scope of this research: tracing the evolution of individual projects and programs from their inception, observing the mechanisms of the project cycle, and scrutinizing other operational and institutional aspects (staff guidelines , incentive systems, culture) of aid agencies and recipient governments.4 This essay is considerably more modest. I begin by examining the common motivations, planning, and challenges associated with increasing aid volumes. I then identify some readily observable characteristics of aid programs that appear supportive of scaling up development impact and test whether their incidence can be explained by the growth in aid programs over the past decade. Finally, I look at a sample of donor-country case studies and review their experiences in managing increasing levels of aid and their attempts to translate these into greater development impact (or otherwise). To avoid confusion, the term scaling up is used hereafter to refer only to the scaling up of development impact. Motivations for More Aid Aid budgets are the responsibility of individual donor governments and are therefore shaped by country-specific factors. Nevertheless, one can identify three factors that have played an important role in driving increased aid volumes over the previous decade and that are common across many donor countries. First, the September 11 terrorist attacks sparked new concerns over the threats posed by fragile states, prompting several governments to adopt a more activist foreign...