This chapter assesses progress on a number of indicators first set out in the Development Co-operation Report for 2003 to measure how the development community is contributing to the sustainable reduction of poverty. It finds that there is progress on many fronts, but that it has been relatively modest. As the indicators measure the results of a huge number of decisions by many different actors, it is not surprising that overall change is quite slow. But the findings underline the scope for much further progress if the development community is to make as large an impact as it should on helping poor countries advance towards the Millennium Development Goals.

Peer reviews have brought many issues to the attention of the Development Assistance Committee over the last five years. This chapter retains twelve of the more prominent examples of the lessons learned or reconfirmed over the period concerning effective aid management to achieve development results. Lessons at the level of strategy are: i) find the appropriate legal and political foundation; ii) manage competing national interests; iii) achieve greater policy coherence for development and iv) invest in delivering, measuring and transmitting results of aid-financed activity. Organisational management lessons are: v) identify a leadership structure that works; vi) deal with institutional dispersion, vii) manage contributions to multilateral institutions and viii) decentralize management to the field. Lessons concerning management of delivery are: ix) manage the scaling-up of development aid; x) maintain a focused approach towards countries and sectors; xi) emphasise performance-based management, evaluation and quality control; and xii) make human resource management a priority.

This chapter describes current efforts to put the Paris Declaration on aid effectiveness into practice, with a particular focus on health. Lessons are also drawn from aid effectiveness work in support of key development priorities such as gender equality, environmental sustainability and human rights. Health is a complex sector that exhibits all of the challenges captured in the Paris Declaration. It is also at the forefront of the debate on aid effectiveness, with health donors and partner countries working to put the Paris principles into practice. Many challenges remain: i) focusing on results and developing capacities to assess progress; ii) focusing on ownership and making sure that countries, including civil society, are engaged in the design and implementation of initiatives; iii) focusing on collective action that builds on the comparative advantage of each partner; iv) paying attention to countries in fragile situations where sustained, harmonised and coordinated aid is essential.

The Millennium Development Goals remain central to donor policies. By supporting country-led national poverty reduction strategies, donors contribute to reducing poverty – in the poorest as well as in middle-income countries. The Paris Declaration on Aid Effectiveness impacts the way in which donors do their business: they have developed action plans to implement the agenda and many are undertaking significant reforms. Donors pay particular attention to ownership, alignment and harmonisation, and some efforts are also being made in managing for development results. Several report on their aid effectiveness achievements, showing that some individual donor progress has been achieved. Securing gender equality is a priority for all donors: many have developed specific gender equality policies, action plans and guidance for field level implementation. Gender equality is both a horizontal issue and a sector issue with funding allocated for this purpose. Violence against women, women in conflict situations, and rights of girls and women are key areas of intervention.

The OECD’s Development Assistance Committee (DAC) is the key forum in which the major bilateral donors work together to co-ordinate development co-operation and to increase the effectiveness of their efforts to support sustainable development. The DAC is one of the main committees of the OECD, and has 23 members. The DAC, however, has three features which distinguish it from other committees within the OECD Secretariat. First, it meets more frequently than other OECD committees (about 15 times a year) and the Chair is based at OECD headquarters in Paris. Second, the DAC has the power to make binding recommendations in matters within its competence, to countries on the Committee as well as to the Council (e.g. DAC Recommendation on Untying ODA to the Least Developed Countries, 2001). Third, the Chair issues an annual report on the efforts and policies of DAC members. This report is the key annual reference document for statistics and analyses on the latest trends in international aid.