(Photo Credit: DFID - UK Department for International Development, Flickr Commons) Western powers are quick to assess the performance of other countries and dispense policy advice – but how well esteemed are these so-called development partners by the leaders of the countries that they are trying to help?

Late last year, AidData – a research and innovation lab at the College of William and Mary – released a report entitled Listening to Leaders in which nearly 6,750 policymakers and practitioners from 126 low- and middle-income countries shared their views about the influence and performance of over 100 aid agencies. The report is based upon a first-of-its-kind survey that attracted participation from high-level officials across the public, private, and civil society sectors, including 49 heads of state and 268 heads of government ministries and agencies.

This unique source of feedback from those who are making and shaping policy in the developing world gives in-country decision-makers a rare opportunity to tell development partners which sources of advice and assistance they regard as most and least useful. Western and non-Western donors can also use the data to better target their funding – for example, when deciding whether to direct funds to their own bilateral agencies and embassies or to multilateral organizations, like the World Bank and Global Fund to Fight AIDS, Tuberculosis, and Malaria.

The aid market is far more crowded and competitive than it was just fifteen years ago. Emerging powers – such as China, India, Brazil, and the Gulf States – now provide a significant amount of development assistance and policy advice to other countries. Foundations and philanthropists also play a more prominent role, as does the private sector. Therefore, if development partners want to have policy influence, they need to know how their partner country counterparts judge their performance and what in-country partners deem to be a donor’s comparative advantages and disadvantages.

Aid agencies have become more mindful of the need to deliver value for money, as many have seen budgets curtailed or have even had to close their doors. But discussions about aid agency effectiveness are often politicized, restricted to assessing individual programs, or limited to evaluating one organization in isolation. To deliver greater “bang for buck,” aid agencies need better metrics to measure and compare their own performance vis-à-vis other providers of assistance and advice.

The aid agencies that have the most influence on the policy priorities of low- and middle-income countries are not large Western donors. Rather, they are large multilateral institutions –  such as the World Bank, the GAVI Alliance, and the Global Fund to Fight AIDS, Tuberculosis, and Malaria – that wield outsized development policy influence.

Why does multilateralism matter? Supranational institutions are seen as honest agents that provide independent and credible policy advice. Consequently, those that allocate limited aid budgets in Western and non-Western capitals face a tradeoff: bilateral aid is often favored as a tool for advancing the geo-strategic and commercial interests of donor countries, but it is generally less effective as an instrument for encouraging social, economic, environmental, and governance reform in the developing world. Multilateral institutions are usually a more effective means of advancing development policy objectives in low- and middle-income countries.

While bilateral agencies generally fare worse than their multilateral counterparts, there are notable exceptions. Our data shows that Ireland, New Zealand, and Luxembourg convert modest aid budgets into greater-than-expected policy influence, reflecting the high level of attention and patient investment that their aid agencies devote to a small number of partner countries.

Sectoral specialization also matters if donors wish to influence leaders in the developing world. Some Western development partners have successfully carved out sectoral areas of comparative advantage. Germany, for example, dominates the environmental policy market, while the UK and Sweden are among the highest-performing donors in the anti-corruption and transparency space. The United States is regarded by in-country decision-makers as a leading provider of democracy reform advice and assistance. However, when aid agencies spread themselves too thinly across many countries and sectors – as is the case with many large bilaterals – they run the risk of becoming a jack-of-all trades and a master of none.

Our findings also speak to the question of whether non-Western sources of soft power are beginning to eclipse Western sources of influence in the developing world. Many pundits and policymakers speculate that the so-called “Beijing Consensus” and “Mumbai Consensus” will soon dislodge the “Washington Consensus.” However, our data suggests that these claims are overblown. Consider China: host government officials rated the usefulness of China’s policy advice from China Development Bank, China Ex-IM Bank, and Chinese embassies as 75th, 59th, and 70th best, respectively, out of 86 bilateral and multilateral development finance institutions. Whether this pattern will persist over time remains to be seen, as emerging powers have less of a track record of engaging with public sector decision-makers in developing countries.

The “revolving door” nature of public sector work in the developing world may help explain why it has proven difficult for non-Western donors to achieve much influence with their developing country counterparts. For decades, Western aid agencies employed so-called “local hires” – national staff based in the countries where they work – to help design and implement development programs. Our analysis of the data from the 2014 Reform Efforts Survey suggests that many of these local hires later assume positions of power in their home governments. With this, familiarity breeds favorability: the more extensive an individual’s work history with a given foreign aid agency, the more favorably he or she will view that organization when he or she assumes public office in his or her own country. Due to the fact that Western aid agencies have employed, trained, and professionally socialized a large number of policymakers over the years, governments across the developing world are filled with sympathetic interlocutors who share their policy preferences.

What, then, can aid agencies do to increase their development policy influence in low- and middle-income countries? Our analysis suggests that bilateral and multilateral institutions should consider several measures if they wish to inform or influence the social, economic, environmental, and governance reforms that developing world leaders pursue.

First, aid agencies can achieve a policy influence dividend when they operate in settings where the chief executive does not actively oppose reform and where a coalition of domestic political actors outside the executive advocates for reform. Aid agencies that focus their efforts elsewhere face a policy influence penalty.

Second, aid agencies can punch above their weight if they align their advice and assistance with the policy priorities of partner governments. When aid agencies spend a disproportionate amount of their money on “technical assistance” (usually high-paid, expert advisers who help design and implement development policies and programs), they actually end up having less sway with the governments they wish to influence.

Third, aid agencies should double down in places where they have a track record of doing good work. We find that countries are more receptive to advice and assistance from an aid agency, if that organization has a track record of previously having helped implement reforms.

Finally, development partners that wish to design and deliver “smart aid,” and maintain a competitive edge in the increasingly crowded global market for assistance and advice would be wise to spend more time listening to leaders from low-income and middle-income countries. The private sector learned this lesson a long time ago: companies that ignore customer feedback do so at their own peril. Aid agencies are now well-positioned to follow suit as it has become vastly easier and cheaper to systematically collect and analyze data on the experiences and preferences of their “customers.” However, given that public sector and non-profit institutions have weaker incentives to listen to feedback than private sector entities, only time will tell if aid agencies choose to embrace the “know thy customer” principle.


Note:  The survey data contained in the Listening to Leaders report is based upon a sampling frame of 55,000 developing world policymakers and practitioners that AidData systematically assembled over a five-year period. It consists of five stakeholder groups, including: host government officials, development partner officials, civil society and NGO leaders, private sector leaders, and independent experts. The sampling frame was used to implement the 2014 Reform Efforts Survey, which benefited from the participation of nearly 6,750 policymakers and practitioners in 126 low-income and middle-income countries. Survey participants provided feedback on the influence and performance of more than 100 Western and non-Western development partners. The survey was experiential in nature. Respondents reported on their firsthand experiences with the specific development partners between 2004 and 2013. Analysis of the survey participant sample indicates that it is representative of the broader population of interest on four key dimensions: sex, country, stakeholder group, and institution type.