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Policy Ownership and Aid Conditionality in the Light of the Financial Crisis

A Critical Review

image of Policy Ownership and Aid Conditionality in the Light of the Financial Crisis

The current economic situation has obliged the international donor community to reexamine its stance on the conditionality of development assistance. This study evaluates which controversies persist with respect to aid conditionality, how successful donors have been in stemming the rising tide of aid conditionality of the 1980s and 1990s, and whether the donor community practices what it preaches regarding the allocation of aid based on governance and development criteria. Above all, the report considers how the financial crisis has rendered it increasingly difficult to maintain traditional conditionality frameworks. Strategies for reducing the number of aid conditionalities and for enhancing recipient ownership of aid policies are proposed in light of the unsustainability of existing frameworks.

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Preface

OECD Development Centre

Since the Paris Declaration of 2005, there has been a genuine reappraisal of the modality of aid giving. “Good policy environments” and “national ownership” have become key elements within the new framework. Nevertheless, although the lexicon of the donor community has moved on, “aid conditionality” is still very much part and parcel of aid-giving. Where do the controversies persist on aid conditionality? How successful have donors been in stemming the rising tide of conditionality of the 1980s and 1990s? Does the donor community practise what it preaches in terms of aid allocation according to governance and developmental criteria? And what implications does the financial crisis have for the sustainability of existing conditionality frameworks? These are some of the questions that this study attempts to address.

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