World Bank vice-president calls aid policies outdated

A leading economist has called on the world's richest nations to abandon what he says are outdated approaches to providing aid, but added that developing countries need to increase the efficiency of public expenditure.

World Bank vice-president and chief economist François Bourguignon said developed countries used the wrong criteria to assess the capacity of developing countries to absorb aid.

He was in Dublin to address a conference on developing world aid organised by Irish Aid.

"Static measures of absorption capacity should not be the standard. You can't say today you will give more to that country because its capacity to absorb aid is higher, or less to that country because its capacity to absorb aid is lower," Mr Bourguignon said.

He criticised the use of economic statistics to judge donors and called on donations to be based on the development strategies of recipient countries.

Pointing to the experience of Mozambique, Mr Bourguignon said that by selecting programmes in investment and social services, developing countries could increase their capacity to use aid effectively.

In an address to the University Philosophical Society of Trinity College Dublin yesterday evening, he said there was no conflict between the goals of increasing equity and growth.

"Redistributing wealth in developing countries will generate some inefficiencies and some losers in the short run. But those short-run costs must be weighed against long-run improvements in equity and growth," he said.