Assessing the Costs and Benefits of Reducing Fragmentation: Coordination in European Aid

Abstract

Official development assistance is highly fragmented. Improved donor coordination could substantially increase efficiency by reducing transaction costs and boost effectiveness by improving its impact. More rigorously applying current approaches to coordination through adherence to the commitments in the European Code of Conduct on Complementarity and the Division of Labour in Development Policy would provide the European Union with significant savings and benefits through, inter alia, fewer aid interventions. Expanding on (Bigsten, A., J.P. Platteau, and S. Tengstam. 2011. The aid effectiveness agenda: The benefits of going ahead. Final Report. Brussels: Soges), the paper assesses potential costs and benefits for EU coordination and concludes that savings could amount to several billion euros annually whilst also positively impacting policy, programming and implementation. However, the large margins of error in quantitative estimates mean that they must be used with great caution in the policy field.

This paper substantially draws on the authors’ study for the European Parliament, “The Cost of Non-Europe in Development Policy: Annex I”, and has benefited from contributions and comments from Mark Furness, Stefan Leiderer, Niels Keijzer, Fredrik Ericsson and Sven Tengstam. Responsibility for the outcome, however, lies solely with the authors: The findings, interpretation and conclusions are theirs and do not necessarily reflect the views of their institutions.