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The DAC has worked over the years to promote untying. Discussions about untying more aid have taken place in the context of aid effectiveness. It is generally argued that untied aid is a more efficient way to deliver assistance. By limiting competition, tied aid raises the cost of many goods and services. Moreover, tied aid tends to favour projects that require capital intensive imports or donor-based expertise over smaller and more poverty-focused programmes. Untying is seen as a step towards increased involvement of developing countries in the selection, design and implementation of aid projects and programmes, and therefore more effective partnerships.
The tying status of each DAC member’s aid programme is presented in summary form in the Statistical Annex of the Development Co-operation Report (see Table 23 and Table 24). The monitoring of the DAC tied aid disciplines (1987 and 1992) and the DAC Recommendation on Untying ODA to Least Developed Countries (2001) is based on donors’ reporting to the Aid Activity database.
The Aid Activity database registers information on the tying status of aid at the level of individual activities. Donors report the untied and tied amounts of each activity, though reporting is 50% complete due to difficulties in collecting this information on some types of aid (in particular, free-standing technical co-operation).
More:
• Exact definitions of untied and tied aid
• Metadata on donors’ reporting on the tying status of aid
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