Can New Aid Modalities Handle Politics?

Are recent donor approaches compatible with a political understanding of policy processes in partner or recipient countries? This question is given increased urgency with the recent calls for and commitment to increasing financial flows, scaling-up of aid, and promoting donor coordination. Do these commitments sharpen the potential dilemma between increased aid and the political processes, and the changes that inevitably accompany this? This paper discusses the nature of the partnership enshrined in the Monterrey consensus, budget support and poverty reduction strategy papers (PRSP) approaches, and assistance directly targeted to the poor, as one way of increasing aid flows to poorest countries. It also discusses approaches to the role of aid in economic growth, and argues for better understanding of the politics of growth. The papers questions whether the current ‘institutions’ or governance paradigm brings sufficient political context to aid delivery, and discusses the relationship between domestic revenue generation and foreign aid. A concluding section draws out implications for aid delivery, and for a potential role of socio-political analysis in new aid modalities.