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What Is the Counterfactual for COD Aid?

This is a joint post with Nancy Birdsall.

We often hear criticism of the COD Aid approach from people who question whether a high-level incentive would really alter the behavior of recipient countries. Paolo de Renzio raised this issue in a recent blog, saying that COD Aid is unlikely to work because recipient “[g]overnments have not only insufficient capacity, but also limited political interest in using available resources to maximize development impact.” The question this raises, though, is not whether COD Aid is worth trying. Rather it is questioning whether any foreign assistance can make a difference. The appropriate counterfactuals for COD Aid are existing aid modalities which rely on extensive engagement between funders and recipients on inputs, planning and implementation. The assumption of current aid modalities is that imposing the funder’s views of planning, institutional structures, training, and technical assistance from abroad can achieve progress even when a recipient country is less than enthusiastic about a program. That is the counterfactual against which to consider COD Aid.