The Risks and Rewards of Development

Dani Kaufmann and Homi Kharas have combined their expertise on governance and aid at the Brookings Institution to produce a new tool for “connecting the empirical dots” on development, aid and governance. The tool – an interactive platform and databank of information about aid quality and governance – aims to ensure that policy discussions are informed by the best available evidence.

The Development, Aid and Governance Indicators platform includes data on the following indicators:

  • Country Programmable Assistance: The proportion of aid available to developing countries to implement projects and programmes;
  • Quality of ODA: The quality of aid, according to the QuoDA assessment conducted by the Brookings Institution and the Center for Global Development;
  • Vulnerability of Aid: The risk of aid ending up in corrupt or mis-governed countries;
  • Worldwide Governance Indicators: The quality of six key dimensions governance;
  • Middle Class Measures: The number of middle class people and their consumption expenditure (historical estimates and forecasts); and,
  • Poverty: The number of people living below the $2 and $5 per day poverty lines (historical estimates and forecasts)

As Kaufmann and Kharas explain, the platform will enable the user to explore the relationship between development, aid and governance and to analyse questions such as: which donors allocate the greatest share of their aid as country programmable assistance?; how does the vulnerability of US aid to corruption and mis-governance in developing countries compare to that of the Global Fund?; and, where will the world’s poor live in 2025? It’s also very user-friendly with data displayable through maps, graphs and the motion charts made famous by Hans Rosling and Gapminder.

However, the interactive platform, the indicators and assumptions on which it is based are not without criticism. The Worldwide Governance Indicators have been subject to a host of questions. The treatment of “aid” as one category is problematic; different aid modalities are – and should be – used in different contexts, in part to respond to the risks of corruption and mis-governance. And limited understanding about the relationship between aid and governance, and between governance and development, makes it very challenging to draw out the policy implications from looking at the empirical dots.

Of most concern is the risk that readers might conclude that aid should only be provided to those countries with effective governance systems and little corruption – a conclusion which the accompanying blog on “How selective is donor aid?” comes very close to. Aid allocations should take account not only of the risks that are inherent in the provision of development assistance, but also the potential rewards. Perhaps in a future edition, as the aid effectiveness agenda pays more attention to results, Brookings will be able to include an indicator on the potential rewards of investing in development as well as the risks?

Nevertheless, by producing an interactive platform and enabling the reader to explore and connect the empirical dots, Kaufmann and Kharas have made an important contribution to an increasingly important policy debate about the pros and cons of focusing aid on well-governed countries. The road from empirical dots to policy implications is rocky, with an uncertain destination, but it’s a road that must be taken. Here at ONE we will be keeping a close eye on the debate and working to ensure that donors’ aid allocations – and decisions about what sorts of aid to provide – find an appropriate balance between risk and reward, that is tailored to country contexts. We’re as keen as anyone to see aid spent as effectively as possible, but as Dani Kaufmann acknowledges, “Risk-taking is certainly part and parcel of development, and thus of development assistance.”


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