Better than Budgetary: The Role of the Millennium Project Report in Supporting Best Practices for Aid Efficiency

Abstract

This thesis examines the Millennium Development Goals as outlined in the Millennium Project report for the use of general budgetary support as the primary means of foreign aid delivery. Following a review of the recommendations inherent in these Goals, an extensive literature review of best practices is provided and discussed. The general consensus of available literature, scholarly study and experience is established:

budgetary support is not an effective means of economic and human development. More specifically, budget support creates moral hazards; decreases quality of governance; taxes and often exceeds institutional and absorptive capacities; encourages ineffective top-down methodologies and practices; imposes ex-ante conditionalities on recipients; and threatens to leave behind some of the world's neediest people and countries due to failure of governments to adhere to Westernized notions of good governance and societal structure. To examine whether the suboptimal methodologies advocated by the Report

have indeed been adopted, , analysis of data from 1995-2009 is undertaken, showing an overall decrease in budget support commitments as a percentage of overall aid, but an increase in disbursal given commitment. At best, these results suggest that donors have acquiesced to requests for decreased conditionality but have ignored calls to increase the share of aid budgets designated as general budget support. Regardless, actual dollar amounts disbursed as budget support are still increasing. Therefore, not only does the Millennium Project Report fail to promote best practices towards fulfillment of the

Millennium Development Goals, its advocacy of a sub-optimal aid delivery mechanism -- general budget support -- can be seen to have materially worsened the overall quality of foreign aid.