Week 1.2 - Development Aid

Question 1

What are the political challenges currently facing foreign aid?

Answer 1

Foreign aid is politically challenged now more than ever due to views of right-wing populist politics in donor countries

Question 2

What is the increasing role of private financial transfers in foreign aid?

Answer 2

The increasing role of private financial transfers can be seen in the SDGs reliance on private flows, such as portfolio investments and Foreign Direct Investment (FDI)

Question 3

Why are aid budgets being cut?

Answer 3

Aid budgets are being cut everywhere due to economic problems in rich countries

Question 4

What are the problems associated with the delivery of aid?

Answer 4

The delivery of aid has always been plagued by problems of accountability and evaluation

Question 5

What are the conflicting purposes of aid?

Answer 5

The conflicting purposes of aid include geopolitical purposes, developmental purposes, commercial purposes for donor countries (strategic resources and markets), and capturing benefits by private actors in recipient countries

Question 6

What are the main categories of aid?

Answer 6

The categories of aid include official development assistance (bilateral aid, multilateral aid), humanitarian aid, military aid, aid from NGOs, and private aid from philanthropic organizations (distinct from commercial lending and foreign investment)

Question 7

How has the US historically used foreign aid for geopolitical purposes?

Answer 7

The US development agenda has historically been driven by a security agenda, with foreign assistance focused on providing military, economic, and technical assistance to friendly nations for international peace and security
This includes various administrations like the 1950 Administration and Mutual Security Technical Cooperation Agency (1951), the 1953 Foreign Operations Administration, and the 1955 International Cooperation Administration

Question 8

What did the US Foreign Assistance Act of 1961 declare?

Answer 8

The US Foreign Assistance Act of 1961 declared that the individual liberties, economic prosperity, and security of the people of the United States are best sustained in a community of nations that respect individual civil and economic rights and freedoms and work together to wisely use the world’s limited resources in an open and equitable international economic system

Question 9

How has military aid been handled historically?

Answer 9

Military aid has had little scrutiny, military aid programs are not monitored, and the data is often oblique and difficult to access
There is no body within OECD comparable to the DAC that monitors military aid

Question 10

What is Official Development Assistance (ODA)?

Answer 10

Official Development Assistance (ODA) is provided by official agencies (not private) to developing countries for economic development and welfare (not for trade or military), and is concessional with a grant element of at least 25%

Question 11

What trends have been observed in the allocation of aid?

Answer 11

Trends in aid include an increased role of NGOs (e.g., from $1 billion in 1970 to $7.2 billion in 1990), increased private philanthropy (e.g., Gates Foundation’s $6.5 billion/year in 2013-2015), less aid to productive sectors (e.g., agriculture, forestry, and fishing decreased to 2/3), increased focus on gender and environmental crises, and making people living with disabilities visible (e.g., UN 2019 Disability Inclusion Strategy)

Question 12

What are the three enduring issues in aid delivery?

Answer 12

The three enduring issues in aid delivery are “Tied Aid,” “Technical Assistance,” and the debate between “programme versus project aid”

Question 13

What is the issue with “Tied Aid”?

Answer 13

“Tied Aid” refers to aid that requires recipient countries to purchase goods and services from donor countries, as exemplified in the UK scandal involving Pregau Dam in Malaysia (1993-1994), where Malaysia was required to buy military equipment from the UK

Question 14

What does the Paris Agreement on Aid Effectiveness (2005) advocate for?

Answer 14

The Paris Agreement on Aid Effectiveness (2005) advocates for working within government systems through “programme lending” and avoiding narrow, conservative projects, to enhance aid effectiveness

Question 15

What is Easterly’s critique of aid effectiveness?

Answer 15

Easterly critiques aid effectiveness due to the lack of accountability in aid programs, lack of scientific evaluations, and inefficiencies in aid delivery
He advocates for the use of randomised control trials (RCTs) in cash transfer programs

Question 16

What is the foundation of Easterly’s skepticism towards aid?

Answer 16

Easterly’s skepticism is based on a historical tradition of skepticism (e.g., Bauer, 1968), issues in planning, information and incentive problems, governance issues, and the failure of collective action, exemplified in the “Big Push” theory

Question 17

How does Dambisa Moyo critique aid?

Answer 17

Moyo critiques aid by agreeing with Easterly’s skepticism, demanding an end to wasteful grants, and advocating for micro-credit, FDI, trade liberalization, and remittances as alternatives to aid

Question 18

What is Milanovic’s response to Easterly’s critique?

Answer 18

Milanovic argues that aid is mainly for political and strategic purposes, that Easterly’s searchers need the state, and that aid should ensure progressive transfers from the rich to the poor countries, while criticising the immorality of randomised control trials

Question 19

What is Lall’s response to Easterly’s critique?

Answer 19

Lall argues that aid bolsters corrupt governments, that aid simply assuages Western guilt, and that Western countries should stop aid to Africa and just open markets

Question 20

What is Radelet’s response to Easterly’s critique?

Answer 20

Radelet argues that aid has contributed meaningfully to growth, particularly in health programs, and that the use of aid for growth has shown positive impacts, even though results vary by context

Question 21

What is Fischer’s structuralist perspective on aid?

Answer 21

Fischer argues for a structuralist approach, stating that aid is useful as long as it promotes structural transformation and helps build productive capacity, allowing countries to run trade deficits and support higher value exports over time

Question 22

How should the effectiveness of aid be assessed?

Answer 22

The effectiveness of aid should be assessed by judging whether it contributes to increasing productive capacity and asking whether it enhances or weakens state capacity

Question 23

What is the concept of “matching aid” in state fiscal capacity?

Answer 23

“Matching aid” refers to aligning aid with improvements in tax collection, using government systems for aid delivery, avoiding a “dual public sector,” and employing sector-wide approach (SWAp) projects in areas like health and education

Question 24

What are the challenges in strengthening a state’s statistical capacity?

Answer 24

Challenges in strengthening a state’s statistical capacity include flawed data, the need for funding agricultural and labor market surveys, and the recognition that statistics are expensive and can be divisive

Question 25

What is the role of "New Donors" and South-South cooperation in foreign aid?

Answer 25

New donors like China, India, Brazil, and the Gulf countries are involved in grants, concessional loans, barter trade, FDI, and commercial loans, and are creating new forms of developmentalism with potential issues of "tied aid" and "debt dependency"

Question 26

What is China’s role in African development?

Answer 26

China’s role in African development includes acquiring natural resources (e.g., strategic minerals for EVs), developing production platforms in agriculture and manufacturing as Chinese wages rise, and creating new markets for Chinese goods and services

Question 27

What factors determine China’s role in African development?

Answer 27

China’s role in African development is determined by domestic politics, national development strategies, and investments in natural resources

Question 28

What impact do MAGA policies have on aid and access to markets for developing countries?

Answer 28

MAGA policies weaken international organizations and law, instrumentalize the World Bank and IMF, retreat from the climate change agenda, and restrict developing countries' access to US and OECD markets (e.g., AGOA in Africa)

Question 29

What are the key recommendations for improving aid effectiveness in the future?

Answer 29

Key recommendations include demand-driven aid, supporting national development strategies, undertaking pilot programs, avoiding aid misuse, strengthening state capacity, supporting long-term engagements, and encouraging integrity in private development consultancies

Question 30

What are the benefits of demand-driven aid?

Answer 30

Demand-driven aid is likely more effective as it reduces the incentives for misuse of aid when organisations like the World Bank, USAID, FCDO, or SIDA arrive with earmarked funds and predesigned programs

Question 31

What lessons can be learned from the success story of US land reform programs in East Asia after WWII?

Answer 31

The success of US land reform programs in East Asia included seeking out local politicians and organizations advocating land reform, conducting local investigations, and implementing programs through village committees

Question 32

How do aid programs affect local configurations of power?

Answer 32

Aid programs inject resources that always have an impact, reducing locational, identity, and gender inequalities

Question 33

What are the future recommendations regarding national development plans/strategies?

Answer 33

Future recommendations include encouraging recipient states to identify priorities, needs, and programs for national development strategies

Question 34

What is the significance of pilot programs versus randomized control trials (RCTs) in aid programs?

Answer 34

Pilot programs, as used in Chinese development programs at home, are more effective than RCTs, although it is unclear if China uses this approach abroad in its aid programs

Question 35

What recommendations exist for designing aid programs that do not sap scarce state capacity?

Answer 35

Aid programs should avoid creating reporting burdens on recipient countries with different systems, and should instead build capacity within states (e.g., Rwanda’s Revenue Authority) to engage with the private sector and assess activities

Question 36

What is the role of state organisations in channeling resources and decision-making in aid?

Answer 36

Resources and decision-making should be channeled through state organisations to avoid parallel delivery mechanisms that weaken national and local systems, such as HIV/AIDS councils, and enhance technical and political budgeting within public organisations

Question 37

What is the recommendation for supporting long-term engagements in aid work?

Answer 37

Aid workers should learn local languages, understand history and society, stay long enough to build confidence, and avoid staying in expat communities

Question 38

What is the importance of integrity in private development consultancies?

Answer 38

Private development consultancies should promote integrity by rejecting plagiarism, relying on well-trained local consultants instead of expatriates, and ensuring sound and original work

Question 39

What are the two tragedies of poverty as described by Easterly (2006)?

Answer 39

The two tragedies of poverty are that extreme poverty causes suffering, preventable diseases, and limited access to education, and despite $2.3 trillion in aid over five decades, basic needs like medicines, bed nets, and education remain unmet

Question 40

What is Easterly’s view on the ineffectiveness of aid?

Answer 40

Easterly argues that aid has failed to promote economic growth, policy reforms, democracy, or honest governance, pointing to $568 billion spent on Africa with no significant improvement in income levels over 40 years Aid agencies lack accountability, contributing to inefficiencies and waste

Question 41

What are “structural adjustment” loans and why do they fail according to Easterly?

Answer 41

Structural adjustment loans are aid loans conditional on policy reforms They have failed in Africa, the former Soviet Union, and Latin America, with both policy reform and economic growth proving unsuccessful, suggesting that aid results in less democratic and honest government, not more

Question 42

How does Easterly compare economic progress in India and China to Western aid efforts?

Answer 42

Easterly argues that citizens in India and China raised their own incomes by $715 billion through free market efforts, whereas the West was agonizing over a few tens of billion dollars in aid Economic progress is better achieved through local entrepreneurship and reforms

Question 43

What are the two key elements necessary to make aid work according to Easterly?

Answer 43

The two key elements necessary to make aid work are feedback and accountability The absence of these elements has been fatal to aid’s effectiveness in the past

Question 44

What issues are associated with the lack of accountability in aid programs?

Answer 44

No single agency is responsible for aid failures, and evaluations often lack independence, such as the World Bank’s Operations Evaluation Department (OED), which has shown limited impact on changing the behaviour of aid agencies

Question 45

What was the significance of the OED's findings in 2004 regarding aid effectiveness?

Answer 45

The OED (2004) indicated that 8 “influential evaluations” influenced actions of borrowers in 32 ways, but only 2 instances affected the behavior within the World Bank itself, with one leading to a negative outcome

Question 46

How did the case of Mali challenge the effectiveness of evaluations in aid programs?

Answer 46

In Mali, the largely positive findings of evaluations did not align with the poor development outcomes observed over the same period (1985-1995) and the unfavourable views of local people, questioning the real impact of evaluations

Question 47

What role does feedback play in aid effectiveness?

Answer 47

Feedback ensures that aid aligns with the needs of beneficiaries, with market demand informing firms and voters holding politicians accountable

Question 48

How does true accountability work in aid programs?

Answer 48

True accountability occurs when an aid agency takes responsibility for a specific, monitorable task aimed at helping the poor, with outcomes depending almost entirely on what the agency does, thus creating strong incentives for performance

Question 49

What is PROGRESA, and what were its results?

Answer 49

PROGRESA (Mexico, 1997) was a program providing cash grants to mothers if their children kept in school, participated in health education, and visited health clinics A randomised control trial in 506 villages showed significant improvements in health, education, and reduced illness incidence.

Question 50

What lesson for aid reformers can be drawn from the success of PROGRESA?

Answer 50

The success of PROGRESA teaches that combining free choice and scientific evaluation can build support for aid programs, where effective programs can be expanded rapidly

Question 51

What is the criticism of current aid models?

Answer 51

The criticism of current aid models is that big global goals like the Millennium Development Goals (MDGs) lack accountability, and multiple agents sharing responsibility dilute individual accountability for results

Question 52

What is Easterly’s view on the role of aid in general economic or political development?

Answer 52

Easterly believes that aid cannot drive general economic or political development but can address specific needs

Question 53

What are Milanovic’s key criticisms of Easterly’s argument on aid?

Answer 53

Milanovic critiques Easterly by noting that the $2.3 trillion figure includes a mix of bilateral aid, concessional loans, and commercial loans (not all aid), and that loans should not be conflated with aid He also highlights that aid serves political, strategic, and domestic economic purposes and criticizes Easterly’s dismissal of these motives

Question 54

What is Lall’s critique of foreign aid?

Answer 54

Lall argues that governance issues and systemic inefficiencies render foreign aid largely ineffective or counterproductive, and that aid often serves donor interests and guilt rather than addressing real needs in recipient countries He suggests that domestic governments, not foreign aid, are key to achieving sustainable development goals

Question 55

What is Radelet’s response to Easterly’s claim that aid is a “miserable failure”?

Answer 55

Radelet argues that Easterly’s claim is overly simplistic and one-sided. While aid is not a magic solution, it has contributed meaningfully in some circumstances, such as economic growth in South Korea, income tripling in Egypt, and near-eradication of polio Different approaches are needed for different governance contexts

Question 56

What is the principal concern of ‘structuralist’ pioneers of development economics?

Answer 56

The principal concern of structuralist pioneers is understanding structural impediments faced by countries undergoing late industrialisation and rapid urban growth, such as chronic trade deficits, foreign exchange shortages, and persistent balance of payments disequilibria

Question 57

What do current debates on aid overlook, according to structuralists?

Answer 57

Structuralists argue that current debates overlook the dual logic of aid’s potential to run trade deficits in the context of national industrialisation strategies, and that this potential is lost if countries run trade surpluses

Question 58

What are the key characteristics of late industrialisation?

Answer 58

Key characteristics of late industrialisation include large technological gaps, dependency on imports for capital and intermediate goods, and rapid population and urban growth

Question 59

What internal and external impediments to growth are identified by structuralists?

Answer 59

Internal impediments to growth include issues like food production or technological capabilities, while external impediments include import dependence and foreign exchange constraints, which are seen as structurally inherent aspects of late development

Question 60

How do structuralists view the role of aid compared to modernisation theorists?

Answer 60

Structuralists view aid as a tool to enable productive trade deficits and to mitigate external vulnerabilities and industrial bottlenecks, while modernisation theorists, like Rostow, focused on socio-cultural impediments as barriers to development

Question 61

What is the Two-Gap model (Chenery and Strout, 1966) in structuralist thought?

Answer 61

The Two-Gap model recognizes the limits of industrializing countries to expand export earnings quickly enough to earn foreign exchange required for complementary imports, highlighting the need for aid to address structural trade imbalances

Question 62

What was Prebisch’s view on trade deficits and aid in the 1950s?

Answer 62

Prebisch identified external trade deficits as structural issues in developing economies and stressed the need for aid to address these structural trade imbalances

Question 63

What were Hirschman’s insights on structural impediments to development?

Answer 63

Hirschman emphasized that domestic food production and foreign exchange are critical bottlenecks to development, and early dependency theorists (e.g., Furtado, Sunkel) highlighted external and internal disequilibria caused by dependent industrialisation

Question 64

What is the ‘Dutch Disease’ in the context of increasing aid to poor countries?

Answer 64

‘Dutch Disease’ refers to the negative economic effect where increasing aid to poor countries could lead to currency appreciation, undermining the competitiveness of domestic tradable sectors, particularly when the country runs a current account surplus

Question 65

What is the critique of contemporary aid debates according to structuralists?

Answer 65

Structuralists argue that modern critiques of aid, such as those by Easterly, Collier, and Sachs, dismiss structuralist insights and fail to account for structural trade imbalances in evaluating aid effectiveness

Question 66

How do structuralists view aid effectiveness in relation to trade deficits and industrial policies?

Answer 66

Structuralists support trade deficits tied to productive investment and emphasise the need for countries to implement active industrial policies to direct investment They also advocate for long-term concessional finance to ensure resource transfer to the poorest

Question 67

What is the importance of enabling late industrializers to manage structural trade imbalances?

Answer 67

Enabling late industrialisers to manage structural trade imbalances without penalties from financial markets is important for ensuring that aid supports productive investment and promotes industrial growth

Question 68

What type of economies have experienced the best growth?

Answer 68

Developing countries with a greater share of manufacturing in labour-intensive sectors

Question 69

How does aid affect different economic sectors?

Answer 69

Aid slows the growth of labour-intensive and exportable sectors while capital-intensive and non-exportable sectors grow faster

Question 70

What does evidence suggest about aid's long-term impact on growth?

Answer 70

Aid's long-term impact is elusive, even in countries with good policies; recent studies show no robust association between aid and sustained growth

Question 71

How can aid weaken institutions in the long run?

Answer 71

Aid can increase dependency and corruption, weakening governance

Question 72

How does aid affect a country's competitiveness?

Answer 72

Aid inflows can lead to real exchange rate overvaluation, reducing competitiveness in the traded goods sector

Question 73

What is 'Dutch Disease' in the context of aid?

Answer 73

Aid inflows increase demand for non-traded goods, leading to higher prices and making traded goods less competitive internationally

Question 74

How does aid cause real exchange rate overvaluation?

Answer 74

In flexible exchange rate regimes, aid pushes up the nominal exchange rate, making exports uncompetitive In fixed exchange rate regimes, spending aid on domestic goods raises costs for key resources (e.g., skilled labour), harming internationally competitive industries

Question 75

What is the relationship between aid and real exchange rate overvaluation?

Answer 75

Aid inflows are positively correlated with overvaluation, and this relationship strengthens over time

Question 76

How does aid reduce a country's competitiveness?

Answer 76

By causing exchange rate appreciation, increasing wages in non-traded sectors, and making labour-intensive exports less profitable

Question 77

How can aid’s negative effects on competitiveness be mitigated?

Answer 77

If aid is spent on traded goods (e.g. imported capital goods, foreign consultants), goods in abundant supply (e.g. unskilled labour), accompanied by fiscal adjustments to prevent excessive wage increases

Question 78

What is the impact of aid on existing firms and new market entry?

Answer 78

Initially squeezes profitability in existing firms Discourages new market entry Eventually forces existing firms to close down

Question 79

How are aid and remittances similar?

Answer 79

Both are “unrequited” financial flows that do not need to be repaid fully

Question 80

How are aid and remittances different in their effects?

Answer 80

Remittances tend to persist only in well-managed economies that avoid overvaluation. Aid inflows often cause wage growth and exchange rate appreciation, making trade uncompetitive

Question 81

Why do remittances not cause the same adverse effects as aid?

Answer 81

They are often spent on housing and local goods that increase demand for unskilled labour without raising wages in export industries Remittances dry up if the exchange rate becomes overvalued, preventing persistent distortions

Question 82

How does aid contribute to economic dependency?

Answer 82

By reducing competitiveness in traded sectors, forcing countries to rely on future aid rather than self-sustaining economic growth

Question 83

What happens when a government reduces borrowing from the banking system due to aid inflows?

Answer 83

It increases credit availability for the private sector, providing more resources for investment

Question 84

Why do aid effects vary across time and studies?

Answer 84

The estimated impact of aid depends on the time horizon chosen, the period studied, whether a fixed-effects model is used, whether aid is treated linearly or non-linearly

Question 85

How does the manufacturing sector differ between Asia and Africa?

Answer 85

Asia has a higher concentration of labour-intensive industries (0.6) than Africa (0.47) Aid inflows shrink labour-intensive export sectors, which have been critical for fast-growing economies

Question 86

When did the UK start employing consultancies for aid projects?

Answer 86

Since 1964, with approximately 40% of aid budgets going to technical assistance

Question 87

How were for-profit consultancies historically funded?

Answer 87

They received bilateral funding from both donor and recipient countries

Question 88

What was the role of for-profit consultancies before the New Public Management (NPM) era?

Answer 88

Provided technical assistance rather than broad policy reform Their role was inherently political but obscured tensions between donors and recipients

Question 89

How did New Public Management (NPM) influence DFID’s use of consultancies?

Answer 89

DFID projects were already outsourced The Logical Framework Approach (Logframe) focused on planning and evaluation, not procurement Aid was seen as a space for participation, empowerment, and control rather than just efficiency

Question 90

How did aid sector outsourcing change under Clare Short?

Answer 90

Shifted towards aid effectiveness and decentralisation, reducing consultants’ roles to technical expertise

Question 91

What are the two main types of for-profit consultancies in the UK aid sector?

Answer 91

Large transnational multiservice firms Smaller specialist development management consultancies

Question 92

How did the development of consultancies in the UK differ from the US?

Answer 92

The US developed earlier, focusing on agriculture and engineering before expanding to general consultancy The UK and Europe expanded more gradually, merging with accounting and audit firms (e.g. Big Four)

Question 93

How did the role of for-profit consultancies expand after 2010?

Answer 93

Conservative government reforms outsourced more aid functions Greater focus on external oversight and results-driven aid

Question 94

What factors led DFID to outsource beyond technical expertise?

Answer 94

Staff shortages for compliance work Doubts about recipient states managing aid effectively Need for greater financial tracking Aid shifted to fragile states, requiring technical expertise Good governance standards required stronger audit mechanisms

Question 95

How has UK aid shifted towards private sector financing?

Answer 95

Aid is now aligned with private interests rather than just poverty alleviation Aid has shifted from a public good to a political tool Financialisation of aid (introducing speculative finance and impact investing)

Question 96

How did DFID’s financial sector spending change between 2012-2016?

Answer 96

Banking and financial services £155.6M → £392.6M Business support services £30.8M → £89.8M Production sector support £269.2M → £521M

Question 97

How are for-profit consultancies shaping development policies?

Answer 97

They not only implement aid policies but actively shape aid discourse and practices Aid is now designed around efficiency and financial viability rather than empowerment and local needs

Question 98

How does consultancy-led aid differ from traditional development approaches?

Answer 98

State-led aid was embedded in recipient countries Global consultancies focus on standardised expertise over local engagement

Question 99

What is the central argument of Whitty et al. (2023) regarding for-profit consultancies in the UK aid sector?

Answer 99

The rise of for-profit consultancies reflects how the development sector has become embedded within capitalist systems, with consultancies shaping development agendas as much as implementing them

Question 100

How did the UK historically use for-profit consultancies in aid?

Answer 100

Since 1964, the UK used consultancies mainly for technical assistance, with about 40% of the aid budget going to this; they operated with funding from both donors and recipients and played politically significant roles while avoiding direct policy reform

Question 101

What role did the New Public Management (NPM) approach play in DFID’s relationship with consultants?

Answer 101

Under NPM, development was already outsourced but consultants were restricted to technical roles, and project design focused on participation and empowerment rather than just efficiency

Question 102

How did Clare Short’s leadership influence DFID’s use of management consultants?

Answer 102

She prioritized aid effectiveness and decentralization, limiting management consultants to technical roles and reinforcing DFID’s focus on development impact over private sector logic

Question 103

What are the two main types of for-profit consultancies in UK development aid?

Answer 103

Large transnational multiservice firms and smaller specialist development management consultancies, both of which have grown to dominate the sector

Question 104

How did US and UK trajectories for development consultancy differ?

Answer 104

The US focused early on agriculture and engineering before expanding to general consultancy, while UK firms evolved more gradually, often merging with accountancy and audit firms like the Big Four

Question 105

What political change in 2010 expanded the role of for-profit consultancies in UK aid?

Answer 105

The Conservative government emphasized results, value for money, and external oversight, leading to greater outsourcing beyond technical expertise and expanding consultants’ roles in compliance, auditing, and project delivery

Question 106

Why did DFID begin outsourcing beyond technical expertise?

Answer 106

DFID faced staff limitations, needed stricter compliance, distrusted recipient governments, required better spending tracking, managed fragile states, and had to meet good governance standards, making private consultants attractive partners

Question 107

What was the Girls’ Education Challenge Fund (GEC), and what role did consultancies play?

Answer 107

The GEC was outsourced to for-profit consultants who collaborated with corporate partners, illustrating the shift from technical support to managing large, complex, and politically visible development projects

Question 108

What is meant by the shift from big ‘D’ to small ‘d’ development in the paper?

Answer 108

It describes the move from transformative, state-led development to managerial, efficiency-driven approaches focused on delivery, compliance, and metrics

Question 109

How did the Labour Party’s approach to aid change over time?

Answer 109

It shifted from poverty-focused, state-led aid to market-driven policies aligning aid more closely with private sector interests and financialization

Question 110

How has private sector financing influenced UK development policy?

Answer 110

Aid now supports microfinance, business reforms, and trade connectivity, with spending on banking, finance, and production services rising sharply between 2012 and 2016, showing a move toward using aid to de-risk private investments

Question 111

How do for-profit consultancies support the financialization of aid?

Answer 111

They serve as intermediaries between aid and private finance, supporting impact investing, risk financing, and private capital mobilization through programs like the IMPACT Programme and Centre for Disaster Protection

Question 112

What are examples of UK initiatives that illustrate the financialization of aid?

Answer 112

IMPACT Programme (Palladium, The Good Economy), Centre for Disaster Protection (OPM → DAI Global UK), and the International Development Infrastructure Commission (led by KPMG) all represent aid supporting private finance logic

Question 113

In what ways are for-profit consultancies shaping development beyond implementation?

Answer 113

They influence how aid is delivered, justified, and monitored, acting as key actors in “little d” development and promoting efficiency-based, externally driven models

Question 114

How do Whitty et al. view INGOs and state governments compared to for-profit consultancies?

Answer 114

Though not romanticized, INGOs and state governments retain rhetorical commitments to development and are embedded in local contexts, unlike consultancies which prioritize global expertise and often sideline local knowledge

Question 115

What critique do the authors offer about the use of global over local expertise in aid?

Answer 115

For-profit consultancies prioritize standardized, global knowledge systems over context-specific, local engagement, potentially undermining inclusive and participatory development practices