Roundtable Topic 2: Alignment

This page comprises information on background resources for Roundtable 2, compiled by the United Nations Development Programme. It does not necesserily represent the views of the Third High Level Forum organizers.

To access detailed information on the background resources for Untying aid listed below, please visit the UNDP Aid Effectiveness Portal.

Background Resources: Untying aid

OECD Policy Brief, “Untying aid to the least developed countries”, July 2001
It is estimated that the tying of aid diminishes its real value by between 15 and 30%. It creates additional administrative burdens for partner countries, while causing a bias towards capital-intensive imports and donor-based technical expertise which may compromise country leadership. In short, tied aid is a costly way of subsidising jobs in donor countries – a form of protectionism that runs counter to the overall OECD commitment to open markets.

ActionAid, “Real Aid: Making Technical Assistance Work”, 2005
ActionAid estimates that some $2.5 billion, or 3% of total ODA, is lost through tying practices. It states that the US, Italy, Canada, Greece, Spain and Austria are the worst culprits on tying of aid, while Ireland, the UK and Norway have fully untied their aid. It notes that, even where aid is not officially tied, procurement practices (how and where tenders are published; the bundling of contracts into large lots) often mean that donor country firms win the majority of the contracts.