Micro for Development - development aid, capture and community-based development

Question 1

why more focus on effectiveness of aid?

Answer 1

• End of Cold War
• Budget constraints in developed countries
• Increasing private capital flows
• Disappointing results of aid
• Appearance of ‘non-traditional’ donors (e.g. China)

Question 2

common critique of development aid

Answer 2

• Top-down approach
• Massive and rapid disbursements within rigid time framework
• Focus on volume rather than quality and sustainability

Question 3

three responses to “crisis” of development aid

Answer 3

• Debt forgiveness
• Replacement of project aid by budgetary support
• Participatory, community-based development interventions

Question 4

tradeoff between information advantages and elite capture

Answer 4

• Main advantage of CBD:
• Better information of local conditions and constraints
• Higher social capital
• Improved effort through intrinsic motivation
• Disadvantage of CBD:
  
  • Elite capture of local governments may be stronger than elite capture of central government / external donors

Question 5

problems with CBD

Answer 5

• Informational problems of communities
  
  • Lack of understanding / consensus of subject matter
  • Lack of consensus on critical parameters of development, such as who is poor and what should be done
• Principal-agent problems
  
  • Elite capture
  • Community may have different preferences from donors
    
    • More attention to short-term objectives
    • Expectation of continued/increasing funding
    • Different views of who is eligible
  • ‘Development brokers’ / local NGOs

Question 6

for game, look at slides! could be relevant for exam

Answer 6

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