Measuring aid costs: what has been learnt and what still needs to be learnt

Abstract This short article reviews recent efforts to measure the costs to recipient governments of how aid is managed. Overall measurement of transaction costs was found to be impractical, so the focus of empirical work shifted to ranking categories of perceived costs. Results indicated that recipient governments find the lack of fit of donor approaches with their own to be more burdensome than the administrative costs of dealing with multiple donors. Subsequent surveys have monitored changes in alignment and harmonisation. While there is clear progress in defining and assessing indicators of donor behaviour, two issues stand out for urgent attention. First, the need to give priority in future surveys to assessing changes in capacity of recipient governments, since capacity underlies alignment. Second, the need for conceptually consistent and reliable international data on aid flows, particularly to enable quantitative assessment of the effectiveness of different types of aid. Copyright © 2005 John Wiley & Sons, Ltd.