# **Aid alignment**

The Paris Declaration commits donors to "base their overall support on partner countries' national development strategies, institutions and procedures". Through the follow-up Accra Agenda, donors pledged to support country ownership of development programs ―by respecting countries’ priorities, investing in their human resources and institutions, making greater use of their systems to deliver aid, and increasing the predictability of aid flows‖ (OECD 2009a). These statements reflect a consensus that donors have often delivered aid in ways that undermine country ownership and institutions.

The Paris Declaration specifies several indicators of the extent to which donors' aid is aligned with country policies and systems. These include: use of country public financial management systems, use of country procurement systems, avoiding parallel project implementation units (PIUs), aid predictability, untying aid, and coordinating technical assistance with national development strategies. The OECD-DAC donors have been reporting on whether or not their aid is tied for many years. The other indicators, however, have been measured only in the last few years through the DAC's Survey on Monitoring the Paris Declaration (SMPD), which was designed to assess progress toward the Declaration’s numerical targets.

We use data from the 2008 SMPD, which reports data for the calendar year 2007. A sizeable fraction of our aid quality indicators are taken from this survey, so we describe its methods and content in some detail below. For comparability with the survey-derived indicators, the indicators we compute from other sources are also based on 2007 aid data, even where 2008 data are already available.

The SMPD excludes humanitarian aid, debt relief, and administrative costs. It covers primarily ODA, but non-concessionary loans from multilateral development banks are also included. The DAC survey includes only 54 aid recipients, but coverage on the donor side is fairly comprehensive. All DAC donors, bilateral and multilateral, are included, as are vertical funds (such as the Global Fund and the GAVI Alliance) and several non-DAC bilateral donors (such as Poland and Hungary). The various UN agencies are treated as a single donor in the survey, with their data collected and reported by the UNDP. Aid volumes to the 54 recipients as reported in the DAC survey closely approximate the corresponding aid totals in the DAC’s official aid database, compiled from an entirely separate reporting system.

Recipient governments decide whether or not to volunteer their country for the survey, which could raise concerns about their representativeness. And in fact the 54 self-selected recipients differ significantly from other aid recipients in several respects: they are larger (in population), more aiddependent (measured by aid per capita), and poorer (measured by GDP per capita). Countries that have completed the HIPC process for debt relief are also over-represented in the survey. Controlling for these four variables, survey participation is unrelated to political openness, quality of economic policies and governance, colonial heritage, or region.<sup>8</sup> Despite the non-random (self-)selection of recipients, there is no obvious reason to believe the sample is biased with respect to measuring the performance of any particular donor. However, the survey may capture a slightly larger share of the aid delivered by some donors than by others (for example, by undersampling donors that allocate more of their aid to smaller or less-poor recipients), increasing the random measurement error on performance indicators for the latter group. Among

> 8 Although 63% of aid-recipient countries in Sub-Saharan Africa are in the SMPD, compared to only 26% from other regions, this difference is accounted for by their income, aid, and HIPC status. An Africa dummy, if added to the selection regression, produces a small and insignificant coefficient.

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