page_title: Tied aid
section_title: Costs to the recipients of aid
hierarchical_section_title: Tied aid / Costs to the recipients of aid
caption_attribution_description: English: Graphic made by me, using statistics from OECD. A note on the calculation: Total bilateral aid was USD 79.5 billion dollars. Reported tied aid was 41.7 percent, but 42 percent was used for simplicity. If one can assume that the remaining 58 percent is tied aid, and that the tying of aid has a constant loss of value of 20 percent , the atrophy equals USD 9.22 billion. Amount of aid affected: USD 46,11 (58&#160;% of total), of which value is redused by 20%.
context_page_description: Tied aid is foreign aid that must be spent in the country providing the aid or in a group of selected countries. A developed country will provide a bilateral loan or grant to a developing country, but mandate that the money be spent on goods or services produced in the selected country. From this it follows that untied aid has no geographical limitations.
  In 2006, the Organisation for Economic Co-operation and Development estimated that 41.7 percent of Official Development Assistance is untied.
context_section_description: It is difficult to make a correct estimate on the related costs to the recipient for various reasons. One of these, is that even though a donor ties its aid, it might be that the donor has the most competitive prices in any case. Another factor is the ability a donor has to enforce the tying of aid in the recipient country. Even so, the OECD has made some general remarks on the costs:
  Aid tying by OECD donor countries has important consequences for developing countries. Tying aid to specific commodities and services, or to procurement in a specific country or region, can increase development project costs by as much as 20 to 30 per cent.
  If donors claim that 42 percent of bilateral aid is untied, one can assume that the remaining 58 is tied. In 2004, total bilateral aid amounted to US$79.5 billion. In the worst-case scenario of OECD, the tying of aid can reduce its value by as much as 30 percent. If that was true in all cases, that translates into a US$13.9 billion reduced value of aid for the recipients. If the value on an average only is reduced by 20 percent, it would equal US$9.2 billion.
caption: Value reduced by 20 %
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