Governance Indicators, Aid Allocation and Millennium Challenge Account

15 Pages Posted: 5 May 2004

See all articles by Daniel Kaufmann

Daniel Kaufmann

Results for Development; The University of the Philippines Diliman; The Brookings Institution

Aart Kraay

World Bank - Development Research Group (DECRG)

Date Written: December 2002

Abstract

Aid works best when it is directed to countries with relatively good institutions and policies. But how should good governance be measured, and how can aid allocation rules be designed in light of the strengths and weaknesses of existing measures? We address in brief a number of methadological and applied challenges, motivated by the U.S. government's recent proposal to allocate resources from the new Millennium Challenge Account (MCA), although the issues and recommendations apply more broadly. Among others, we discuss the implications of margins of error in governance data, the difficulties in measuring trends, and the need to complement existing cross-country indicators with in-depth country diagnostics.

Keywords: Millennium Challenge Account, MCA, Aid Effectiveness, Aid Allocation, Governance Indicators, Governance Data, Corruption

JEL Classification: K42, O10, O19

Suggested Citation

Kaufmann, Daniel and Kraay, Aart, Governance Indicators, Aid Allocation and Millennium Challenge Account (December 2002). Available at SSRN: https://ssrn.com/abstract=534063 or http://dx.doi.org/10.2139/ssrn.534063

Daniel Kaufmann (Contact Author)

Results for Development ( email )

1875 Connecticut Avenue, NW, Suite 1210
Washington, DC 20009
United States

HOME PAGE: http://https://r4d.org/about/our-team/daniel-kaufmann/

The University of the Philippines Diliman ( email )

Manila
Philippines

The Brookings Institution ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States

HOME PAGE: http://www.brookings.edu/experts/kaufmannd

Aart Kraay

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-5756 (Phone)
202-522-3518 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/akraay

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