Managing the transition from aid: lessons for donors and recipients
The past 15 years have seen 35 low-income countries (LICs) achieving middle-income country (MIC) status. While income per capita is only one measure of a country’s economic and social development, the move to MIC status can shape its mix of financing resources and often triggers donor discussion on whether to reduce or even phase out financial assistance.
Several authors have mapped how development assistance overall has been allocated to MICs and how it should be delivered. However, graduation and reclassification policies based largely on income per capita do not capture a country’s complex development challenges or its vulnerability to setbacks.
So how do donors decide to phase out their programs and how do they manage that process? How do recipient countries manage the transition away from aid? And what can we learn from their experiences?
To our great surprise, we found very little research that tried to answer these questions systematically across countries and donors. There are only a handful of outdated reviews of development partners’ approaches to transition and exit, including a joint evaluation of support from Denmark, the Netherlands, Norway and Sweden, and a separate evaluation of the phasing out of support from the Netherlands. Less surprisingly, the few analyses available on recipient countries focus on individual Asian economies (Laos, Vietnam, Indonesia).
So we decided to take a first step and analyse how selected bilateral donors approach transition (beyond aid allocation) (including Australia, the EU, and Korea). Second, we reviewed how recipient countries are affected by – and plan for – transition, including …read more