The Money-moving Syndrome and the Effectiveness Offoreign Aid: Diagnostic Tools to Improve Donor Agencies? Lendingprocess to Aid-receiving Countries

Aid ineffectiveness, defined as the low performanceof aid in promoting economic growth and reducingglobal poverty, is a problem utterly complex,prevalent and unfortunately still unresolved. Fordecades now, it has generated a huge literaturereaching conflicting conclusions as to thejustifications of aid, the impact of aid on growthand institutional reforms, and the role of economicand political institutions in aid effectiveness. This book examines in depth one of the potentialcauses of the low performance of foreign aid; inparticular, the role incentive structures withininternational donor agencies could play in leading to?a push? to disburse money. This pressure to disbursemoney is termed as the ?Money-Moving Syndrome? whichexists when the quantity of foreign aid committed ordisbursed becomes, in itself, an important objectiveside by side or above the effectiveness of aid. Ifthe overall objective is to maximize theeffectiveness of aid, it would appear essential toenhance the design and objectives of aid resources atthe source, i.e., at the stage where the fundsoriginate with donors, before considering the causestainting aid in recipient countries.