Do ODA Loan Rules Incentivise Lending to Poorer Countries?
Official development assistance (ODA), the most commonly used measure of aid, is intended to assess donor effort. This is clearly valuable: an accurate measure of donor effort allows us to hold donors to their commitments, encourage them to do more for developing countries, and assess their priorities. However, the incentives this measurement creates also matter, as recognised by the OECD’s Development Assistance Committee (DAC), which sets the rules for measuring ODA: do the rules provide an incentive to direct resources to poorer countries who need them the most? If so, it could be argued that slightly less accuracy in measuring donor effort may be justifiable.