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The question of whether aid recipient countries would benefit from stronger income effects if foreign donors provided higher quality aid has received scant attention so far. We make use of the ranking of donors by the Center for Global Development to compare the effects of quality-adjusted aid and unadjusted aid on changes in GDP per capita. Our difference-in-difference-in-differences analysis reveals significant treatment effects for quality-adjusted aid, while we do not find significant treatment effects for unadjusted aid. The quality of aid matters most when accounting for delayed effects. However, our results depend on the sample of recipient countries.

Donor reactions to recent settlements of internal conflicts have been highly diverse, in terms of both overall aid and its sectoral composition. The allocation of post-conflict aid tends to be needs-based by favoring particularly poor countries. There is no conclusive evidence, however, that the allocation was shaped by the severity and type of conflicts prior to settlement. Furthermore, the sustainability of conflict resolution appears to be unrelated to the amount and composition of post-conflict aid. These findings, though based on a limited number of post-conflict episodes, underscore concerns voiced by the OECD and non-governmental organizations that traditional approaches to post-conflict aid are not effective.

The effects of foreign aid on the endowment of recipient countries with infrastructure have received surprisingly little attention in the empirical literature. This paper addresses this question by performing difference-in-difference-in-differences estimations, with the treatment defined as steep increases in aid for infrastructure since a distinct change in donor behavior in 2005. Mitigating endogeneity concerns in this way, we consistently find aid for infrastructure to be ineffective in improving the recipient countries' endowment with infrastructure. This finding holds not only for an encompassing index of economic infrastructure, but also for sub-indices of infrastructure in transportation, communication, energy, and finance.

Aid proliferation and a lack of coordination are widely recognized as serious problems for aid effectiveness, and donors have repeatedly promised to tackle them, e.g. in the Paris Declaration in 2005 and the Accra Agenda for Action in 2008. In this paper, we employ geocoded aid data from Uganda to assess whether the country's donors have increasingly specialized and better coordinated their aid activities at the district and sector level. Our findings point in the opposite direction: over the period 2006-2013, aid of most major donors in Uganda became more fragmented, and the duplication of aid efforts increased. There is tentative evidence that donors were more active in poorer parts of the country, which would provide some justification for clustered aid activities.

Acknowledging that aid proliferation and a lack of coordination impair aid effectiveness, donors have repeatedly promised to specialize and better coordinate their aid activities, most notably in the Paris Declaration of 2005. We exploit geocoded aid data from Malawi to assess whether the country's bilateral and multilateral donors have acted accordingly at the district and sector level. We do not find compelling evidence for increased aid specialization after the Paris Declaration, and the regional division of labor among donors may even have deteriorated. Our within-country evidence thus broadly corroborates what previous studies found at the national level of recipient countries.

We argue that donors could improve the effectiveness of foreign aid by pursuing complementary and coherent non-aid policies. In particular, we hypothesize that aid from donors that are open to immigration has stronger growth effects than aid from closed donors. We estimate the aid-growth nexus in first differences to mitigate endogeneity concerns. Our empirical results support the hypothesis that donors' openness to immigration strengthens the growth effects of foreign aid.

Aid flows continue to be volatile and unpredictable, even though it is widely accepted that this erodes the effectiveness of foreign aid. We argue that fragmented donor-recipient relationships, notably the large number of minor aid relations that tend to be associated with donors' desire to have 'fly their flag' around the world, increase aid unpredictability. Our empirical analysis of the determinants of aid unpredictability suggests that aid becomes less predictable with more fragmented donor-recipient relationships. Specifically, the effect of fragmentation on overshooting previous spending plans is statistically highly significant and substantively important. In contrast, fragmented donor-recipient relationships have no effect on the shortfall of actual aid compared to donors' spending plans.

Our empirical estimations indicate that aid-for-trade granted by OECD donors strengthens the trade relations of recipient countries with other developing countries. By focusing on South-South trade we mitigate endogeneity concerns that have plagued analyses of trade between recipients and donors of aid-for-trade.

NGOs are widely perceived to raise their flag in humanitarian hot-spots with strong media presence in order to attract higher private donations. We assess this hypothesis by comparing the changes in donations between US-based NGOs with and without activities in the four countries most affected by the tsunami in the Indian Ocean in 2004. Performing a difference-in-difference-in-differences (DDD) approach, we find only weak indications that private donors systematically and strongly preferred active over inactive NGOs.

Considering that primary commodity dependence continues to be a major problem of various lower income countries, we analyze whether Aid for Trade (AfT) has helped recipient countries upgrade and diversify their exports. Estimating an asymmetric and aggregated gravity model, we find that AfT has been effective in promoting recipient exports of manufactures - whereas the effects on primary commodities are typically insignificant. These findings hold not only for trade relations with donor countries but also in south-south trade with other developing countries.

Political proximity between donor and recipient governments may impair the effectiveness of aid by encouraging favoritism. By contrast, political misalignment between donor and recipient governments may render aid less effective by adding to transaction costs and giving rise to incentive problems. We test these competing hypotheses empirically by considering the political ideology of both governments along the left-right spectrum in augmented models on the economic growth effects of aid. Following the estimation approach of Clemens et al. (2012), we find that aid tends to be less effective when political ideology differs between the donor and the recipient.

Apart from altruistic reasons, NGOs may engage in developing countries under conditions of conflict and war in order to secure funding and survive in the 'market' of humanitarian relief and development assistance. Applying a difference-in-difference-in-differences approach, we analyze empirically whether the presence of US-based NGOs in Afghanistan and Iraq improved their chances of external funding. We find that NGOs being active in Afghanistan tended to benefit from easier access to official sources of funding after the US intervention, compared to NGOs staying away. Nevertheless, there is no compelling evidence that it pays for NGOs to engage where the United States intervenes militarily.

Development assistance has been criticized for a lack of coordination between aid donors. This paper argues that competition for export markets and political support prevents donor countries from closer coordination of aid activities. To test these hypotheses, we perform logit and fractional logit estimations for a large sample of recipient countries and aid activities since the early 1970s. Our empirical results reveal that export competition between donors is a major impediment to aid coordination. Tough less conclusive, we also find some evidence that donors' competition over political support prevents them from coordinating aid activities more closely.

We investigate the importance of geo-strategic and commercial motives for the allocation of German aid to 138 countries over the 1973-2010 period. We find that geo-strategic and - less robustly - commercial motives matter. When we relate geo-strategic and commercial motives to the political color of the German government in general, and the Ministry for Economic Cooperation and Development and the Federal Foreign Office in particular, we find their importance to increase under socialist leadership. Socialist leadership also decreases the amount of aid commitments, controlled for other factors.

Recent studies offer an ambiguous picture on the effectiveness of foreign aid in strengthening the export capacity of recipient countries. Moreover, the literature on aid for trade (AfT) has often neglected that exporters in the donor countries may be among the main beneficiaries. We hypothesize that AfT is as much in the self-interest of donor countries as it may have promoted the exports of recipient countries. We simultaneously estimate and compare the effects of AfT on trade in both directions. We find that AfT increases recipient exports to donors as well as recipient imports from donors. The first effect tends to dominate the latter, which contradicts the skeptical view that donors grant AfT primarily to promote their own export interests.

We address the question of whether foreign aid helps attract foreign direct investment (FDI). This could be achieved if well targeted aid removed critical impediments to higher FDI inflows. In particular, we test the hypothesis that aid for education is an effective means to increase FDI flows to host countries in Latin America where schooling and education appears to be inadequate from the viewpoint of foreign investors. We employ panel data techniques covering 21 Latin American countries over the period from 1984 to 2008. We find that aid for education has a statistically significant positive effect on FDI. This effect is robust to potential outliers, sample selection, alternative specifications and different estimation methods.

What determines the foreign aid effort of donor countries? We review the existing literature on donors' aid budgets and examine which of the suggested variables robustly determine aid effort, measured as Official Development Assistance (ODA) as a share of gross national income. More specifically, we empirically test 16 hypotheses using panel econometric methods for member countries of the Development Assistance Committee (DAC) in the 1976-2008 period. To test for the robustness of our results, we extend our dataset to 48 possible determinants of aid budgets and apply an Extreme Bounds Analysis (EBA). In our fixed effects regressions, we find that aid inertia, the donor country's GDP per capita, the existence of an independent aid agency, and colonial history have a robust and quantitatively relevant impact on countries' aid efforts. Among the potential substitutes for aid, remittances exert a robust effect. Excluding year fixed effects, political globalization, Russian military capacity, peer effects, aid effectiveness, and government debt also play a significant role.

The targeting of foreign aid within recipient countries is largely unexplored territory. We help close this gap in empirical research on aid allocation by employing Poisson estimations on the determinants of the World Bank's choice of project locations at the district level in India. The evidence of needs-based location choices is very weak, even though World Bank activities tend to concentrate in relatively remote districts. Spatial lags prove to be significant and positive pointing to regional clustering. Institutional conditions matter insofar as project locations cluster in districts belonging to states with greater openness to trade. We do not find any evidence that location choices are affected by political patronage at the state or district level. However, the World Bank prefers districts where foreign direct investors may benefit from projects related to infrastructure.

NGOs could help scale up foreign aid efforts by mobilizing private donations. However, fundraising activities do not necessarily result in higher donations, and substitution effects between different sources of revenue may diminish the overall pool of NGOs' resources. This paper examines the determinants of private donations to US-based NGOs engaged in international development cooperation. We employ panel cointegration and causality techniques to analyze the interactions between private donations, government grants, commercial revenues and fundraising expenditures. According to our results, a marginal dollar spent on fundraising yields almost five dollars in new donations in the long run. Government grants crowd in private donations in the long run, whereas commercial revenues crowd out donations in the long run. Moreover, our panel vector error correction model reveals complex short-run dynamics.

This paper examines the long-run effect of foreign aid on income inequality for 21 recipient countries using panel cointegration techniques to control for omitted variable and endogeneity bias. We find that aid exerts an inequality increasing effect on income distribution.

The non-distribution constraint of non-governmental organizations (NGOs) would be harder, and financiers as well as recipients could expect more charitable output from them, if less efficient NGOs were squeezed out of international development cooperation. We employ Probit and complementary log-log estimations to analyze which factors determine the probability of 'market' exit for almost 900 US based NGOs with overseas aid activities during the 1984-2003 period. Apart from their size and experience, we consider administrative overheads as an important aspect of NGO efficiency. We also account for other dimensions of NGO heterogeneity, including the importance of official refinancing. We find that larger administrative overheads increase the probability of exit for secular NGOs, though not for religious NGOs. Furthermore, we detect complex non-linear effects once the interactions between administrative overheads and official refinancing are taken into account.

The Monterrey Consensus agreed at the UN summit on Financing for Development in 2002 promised a breakthrough in terms of donor generosity, aid effectiveness and new means of financing. However, the development orientation of world leaders proved to be short-lived. This is even though our evaluation reveals progress since Monterrey in some areas, notably debt relief and private (FDI) flows. Calls for substantially scaling up regular aid had little effect, and financial innovations contributed only marginally to overall development financing so far. There is not much progress either from the perspective of critics focusing on the quality of aid. In particular, we find that the targeting of aid according to need and merit leaves much to be desired. The gap between words and deeds continues to be wide with regard to aid proliferation and donor coordination, too.

We assess whether bilateral and multilateral donors of foreign aid specialized and coordinated their activities with other donors as agreed in the Paris Declaration of 2005. We account for donor heterogeneity, varying aid priorities and recipient characteristics in order to isolate changes in donor behaviour over time. Recent shifts in aid priorities, such as the rising importance of general budget support, have reduced the fragmentation of aid. Nevertheless, our results reveal that aid fragmentation persisted after the Paris Declaration and coordination among donors has even weakened.

Advanced OECD countries are widely held responsible to contain global carbon emissions by providing financial and technical support to developing economies, where emissions are increasing most rapidly. It is open to question, however, whether more generous official development assistance would help fight climate change effectively. Empirical evidence on the effects of foreign aid on energy and emission intensities in recipient countries hardly exists. We contribute to closing this gap by considering energy use and carbon emissions as dependent climate-related variables, and the volume and structure of aid as possible determinants. In particular, we assess the impact of aid that donors classify to be specifically related to energy issues. In addition to OLS estimations, we perform dynamic panel GMM and LSDVC (corrected least squared dummy variables) estimations. We find that aid tends to be effective in reducing the energy intensity of GDP in recipient countries. All the same, the carbon intensity of energy use is hardly affected. Scaling up aid efforts would thus be insufficient to fight climate change beyond improving energy efficiency.

Performance-based aid has been proposed as an alternative to the failed traditional approach whereby donors make aid conditional on the reform promises of recipient countries. However, hardly any empirical evidence exists on whether ex post rewards are effective in inducing reforms. We attempt to fill this gap by investigating whether the Millennium Challenge Corporation (MCC) was successful in promoting better control of corruption. We employ a difference-in-difference-in-differences (DDD) approach, considering different ways of defining the treatment group as well as different time periods during which incentive effects could have materialized. We find evidence of strong anticipation effects immediately after the announcement of the MCC, while increasing uncertainty about the timing and amount of MCC aid appear to weaken the incentive to fight corruption over time. We conclude that - if designed properly - conditionality can work.

Major DAC donors are widely criticized for weak targeting of aid, selfish aid motives and insufficient coordination. The emergence of an increasing number of new donors may further complicate the coordination of international aid efforts. On the other hand, new donors (many of which were aid recipients until recently) may have competitive advantages in allocating aid according to need and merit. Project-level data on aid by new donors, as collected by the PLAID initiative, allow for empirical analyses comparing the allocation behavior of new versus old donors. We employ Probit and Tobit models and test for significant differences in the distribution of aid by new and old donors across recipient countries. We find that new donors (i) focus on closer neighbors, (ii) care less for recipient need, (iii) exhibit a weaker bias towards badly governed countries, (iv) respond to disasters, but with fewer resources than old donors, and (v) do not pursue commercial self interest.

We assess the determinants of the wide variation in the efficiency of foreign aid activities across US-based non-governmental organizations (NGOs). In particular, we analyze whether noncharitable expenditures for administration, management and fundraising depend on the intensity of competition among NGOs and on the degree to which they are refinanced by governments. We control for NGO heterogeneity in various dimensions as well as major characteristics of recipient countries. We find that fiercer competition is associated with more efficient foreign aid activities of NGOs, rather than leading to “excessive” fundraising. Official funding tends to increase administrative costs. Nevertheless, officially financed NGOs spend relatively more on charitable activities since they are less concerned with collecting private donations through fundraising efforts., info:eu-repo/semantics/published

Apart from scaling up foreign aid by NGOs, informed choices of private donors could also encourage an efficient and targeted use of NGO funds in international development cooperation. We assess the determinants of private donations across a large sample of US based NGOs with foreign aid activities. OLS and 2SLS estimations indicate that donors hardly make use of publicly available information on NGO characteristics, notably the 'price of giving' and the degree of specialization, when deciding on donations. They rather rely on the frequently offered option to designate donations to preferred purposes - even though this behavior would be rational only under conditions that are unlikely to hold.

It is widely believed that the Millennium Challenge Corporation (MCC) has grossly fallen short of high expectations raised by the Bush administration in 2002. From the perspective of potential recipient countries, the crucial issue is whether the MCC increased the overall pool of aid resources available to them. We argue that this question extends far beyond the distribution of the limited MCC resources. By employing OLS and treatment-effects estimations, we assess how other US aid agencies and non-US donors reacted to MCC decisions. We find that positive signaling effects tend to dominate possible substitution effects not only for overall US aid but also for multilateral donors. Regarding other bilateral donors the evidence is mixed.

Using a new dataset for 41 German non-governmental organizations (NGOs), we analyze the allocation of NGO aid across recipient countries in a Tobit regression framework. By identifying for each NGO the degree of public refinancing, we address the largely unresolved issue of whether financial dependence on the government impairs the targeting of NGO aid. It turns out that German NGOs are more active in poorer countries, while they do not complement official aid by working under difficult local conditions. Beyond a certain threshold, rising financial dependence weakens their poverty orientation and provides an incentive to engage in “easier” environments. In addition, we find that the NGOs follow the state as well as NGO peers when allocating aid. This herding behavior is, however, hardly affected by the degree of public refinancing., KOF Working Papers, 247

We assess empirically whether foreign official development assistance (ODA) has been effective in alleviating HIV/AIDS epidemics, which figures prominently among the Millennium Development Goals. We employ a difference-in-difference-in-differences approach to identify the treatment effect of ODA specifically meant to fight sexually transmitted diseases on HIV/AIDS-related outcome variables. We do not find that ODA has prevented new infections to an extent that would have reduced the number of people living with HIV. By contrast, ODA has contributed effectively to the medical care of infected people. However, conclusive evidence on significant treatment effects on AIDS-related deaths only exists for the major bilateral source of ODA, the United States. In particular, targeted US assistance programs appear to be more effective than the activities of multilateral organizations.

Non-governmental organizations (NGOs) are widely expected to provide better targeted aid than state agencies with a hidden agenda of commercial and political self-interest. However, principal-agent models question that NGOs decide autonomously on aid allocation. Indeed, we show empirically that NGO aid offers no panacea: The focus of NGOs on the neediest recipients turns out to be surprisingly weak. NGOs hardly make use of the perceived comparative advantage of working in difficult environments." Rather, they are strongly inclined to follow the herd of other NGOs and mimic the allocation behaviour of state agencies, especially if they depend on public co-financing.

Having passed the "market test", private aid is claimed by its proponents to be better-targeted than official development assistance (ODA). But empirical evidence is largely lacking. We contribute to closing this gap by performing a case study of Nestlé, one of the frontrunners among multinational corporations being actively involved in the alleviation of poverty. The targeting of Nestlé's aid is compared to that of Swiss ODA and NGO aid, testing for both altruistic and selfish aid motivations. It turns out that Nestlé favored more democratic but also more corrupt recipient countries. Moreover, Nestlé's aid clearly lacks focus in terms of targeting poor countries, which appears to be the downside of the strong link between commercial presence and aid. By contrast, Swiss ODA and NGO aid is more altruistic and poverty-oriented.

Being closer to the poor, NGOs are widely believed to provide better targeted aid than state agencies. But empirical evidence is largely lacking. We contribute to closing this gap by drawing on an exceptionally detailed Swiss database that covers different forms of NGO aid and several official aid benchmarks. The differentiated Tobit estimations account for both altruistic and selfish aid motivations. It turns out that it depends on the source of NGO funding as well as the choice of the official benchmark whether or not NGOs provide better targeted aid. In contrast to widespread belief, however, the allocation of self-financed NGO aid reveals striking similarities to the allocation of official Swiss development aid.

NGOs play an important role in international development cooperation, but the allocation of NGO aid has rarely been mapped, let alone explained. Based on a representative dataset for 61 important NGOs from various OECD countries, we analyze the targeting of NGO aid across a large number of recipient countries by jointly considering major determinants of NGO aid in a multivariate regression framework. While our results show that NGOs are more active in the neediest countries, we reject the hypothesis that NGOs complement official aid through engaging in so-called difficult institutional environments. Rather, they tend to replicate the location choices of official ?backdonors.? Moreover, NGOs follow other NGOs so that aid gets clustered. Finally, NGOs select recipient countries with common traits related to religion or colonial history. Taken together, our findings suggest that NGOs keep a low profile rather than distinguishing themselves from other donors and trying to excel under risky conditions.

This paper analyzes whether and to what extent non-governmental organizations (NGOs) outperform official donors by allocating aid in a way that renders effective poverty alleviation more likely. We employ Probit and Tobit models and make use of an exceptionally detailed database that allows an assessment of the allocation of Swedish NGO aid in comparison to the allocation of Swedish official aid. Our results show that NGOs are more selective when deciding about which countries to enter at all. Moreover, in contrast to NGO aid, there is some evidence that political and commercial motives matter for the selection of ODA recipients. However, the Swedish case also supports the skeptical view according to which NGOs are unlikely to outperform official donors by providing better targeted aid when it comes to the allocation across recipients having passed the eligibility test., KOF Working Papers, 180

This paper empirically analyzes the impact of aid on education for about 100 countries over the period 1970 - 2005. We estimate a system of equations to test whether and to what extent the impact of sector-specific aid on educational attainment depends on (i) the extent to which aid adds to overall educational expenditure of the recipient government, (ii) the strength of the link between government expenditure and education, (iii) the quality of institutions in the recipient country, and (iv) whether aid encourages institutional reforms. According to our results, aid significantly increases primary school enrolment. This result is robust to the method of estimation, employing instruments to control for the endogeneity of aid, and the measure of institutional quality employed. The degree of institutional quality, however, has no robust impact on this relationship.

It continues to be heavily disputed whether foreign aid promotes economic growth in developing countries. In most cross-country regressions, aid is considered effective only if it shifts recipient countries to a significantly higher and sustainable growth path. We apply an alternative approach which is less demanding, based on the concept of temporary growth accelerations suggested by Hausmann, Pritchett and Rodrik. In assessing what can reasonably be expected from the donors' modest aid efforts, we do not only employ aggregate aid data but we also differentiate between major aid categories, including grants, loans and so-called short-impact aid. It turns out that aid flows have a small but significantly positive effect on the conditional probability of growth accelerations. This result holds across different estimation methods. Short-impact aid is found to be more effective in this respect, while we reject the view that grants are superior to loans. To the contrary, we find a stronger effect of loans. Furthermore, aid has become more effective during the second half of our sample. Typically, however, the significance of results crucially depends on the criteria applied to identify growth accelerations.

In this paper, we perform a Tobit analysis of aid allocation, covering the period 1999-2002 and accounting for both altruistic and selfish donor motives. It turns out that poorer countries get clearly more aid from both bilateral and multilateral donors. Most donors are also found to direct significantly more aid to well-governed recipients if governance is measured by the World Bank's Country Policy and Institutional Assessment (CPIA). If the CPIA is replaced by the Kaufmann index on institutional conditions in recipient countries, however, the policy orientation of aid becomes extremely weak. In contrast to a recent paper by Dollar and Levin, our estimates do not suggest that multilateral aid is more poverty- and policy-oriented than bilateral aid. Post-conflict resolution emerges as a significant determinant of aid allocation in 2002. The importance of selfish aid motives clearly differs between bilateral and multilateral donors. In particular, the export-related self- interest of donor countries provided a fairly strong incentive to grant bilateral aid, as did colonial ties.

Die meisten afrikanischen Länder laufen Gefahr, die Millennium Development Goals weit zu verfehlen. Die Vereinten Nationen fordern deshalb, die Entwicklungshilfe massiv aufzustocken, und der Afrika-Aktionsplan der G8 verspricht eine Konzentration der Hilfe auf Afrika. Vor diesem Hintergrund stellt sich zum einen die Frage, in welchem Maß die lokalen Voraussetzungen für eine produktive Verwendung der Entwicklungshilfe in den afrikanischen Empfängerländern gegeben sind. Zum anderen ist die Versicherung der Geber zu hinterfragen, dass sich die Verteilung der Hilfe für Afrika an Effizienzkriterien orientiert. In beiderlei Hinsicht klaffen zwischen Worten und Taten immer noch erhebliche Lücken. Insbesondere zeigt sich, dass die Vergabepraxis bisher kaum durch veränderte wirtschaftspolitische und institutionelle Rahmenbedingungen in den afrikanischen Empfängerländern geprägt worden ist.

By reallocating aid to where it is needed most and where a productive use is most likely, donors could help alleviate poverty in developing countries. The rhetoric of donors suggests that this insight has increasingly shaped the allocation of aid. However, we find little evidence supporting the view that the targeting of aid has improved significantly. Most donors provide higher aid to relatively poor countries, but so far the fight against poverty has not resulted in a stronger focus on recipient countries with particularly high incidence of absolute poverty. Many donors failed to direct aid predominantly to where local conditions were conducive to a productive use of inflows. The response of donors to changing institutional and policy conditions in recipient countries turns out to be fairly weak. In particular, we reject the proposition that multilateral donor institutions provide better targeted aid than bilateral donors.

In a report presented at the UN Conference on Financing for Development in March 2002, the World Bank claims that the effectiveness of its financial aid has improved substantially by targeting aid at poor developing countries pursuing sound economic policies. However, the World Bank's success story rests on an extremely weak foundation: First, the institution's contribution to financial rescue packages for some emerging markets, rather than poverty concerns and policy assessments, dominated the distribution of World Bank financing. Second, the picture portrayed in the report takes a bad turn if only two outliers with extremely high per capita aid (Cape Verde and Honduras) are excluded from the sample. Third, according to our regression results, the allocation of World Bank aid did not improve in the course of the 1990s.

Germany's role in financing economic development in Asia on a sustainable basis leaves much to be desired. Direct investors are still underrepresented in the region. Commercial banks have fueled speculative bubbles. Official development financing does not appear to be based on efficiency-related criteria. As concerns development financing in the new millennium, the challenge for relatively advanced emerging market economies is mainly to restructure private capital inflows in order to soften boom and bust cycles. Official development financing needs major reforms in order to promote economic growth, alleviate poverty and support good governance in low-income developing countries.