AID EFFICIENCY: CAPABILITIES ENHANCEMENT OR VALUE FOR MONEY A comparative study of Sida and DFID

Abstract

Evaluative frameworks of aid efficiency have various approaches based on donor priorities, international agreements and agenda, and existing theories in place. This thesis aims to investigate whether measurement of capabilities enhancement is losing ground to Value for Money Approach – a theory perceived to look into cost-effectiveness and economic growth only. The comparative analysis is performed from a theoretical and empirical perspective. Based on a literature review this thesis identifies the synergies and incompatibilities of the two evaluative frameworks from a theoretical perspective. This research question seeks to understand the definitory aspects of each of the theories based on couple of criteria: ethics, preconditions to alleviate poverty, accountability, aid impact measurement consideration of economic as means or end to development, agency. The empirical study looks into the integration of the Capabilities and the Value for Money Approach in the strategies of the European aid agencies: Sida and DFID. The study concludes that the Capabilities Approach underlies the definitory concepts and approaches of “what needs to be measured”, such as capabilities-freedom to exert ones being and doing. While the Value for Money approach could be used to define the “how to measure" aid efficiency i.e. how to make most of every penny invested. The study as well concludes that both approaches are integrated in the strategies of Sida and DFID, with a higher weight for the Capability Approach in the case of Sida, and higher weight of the Value for Money approach in the case of DFID. The thesis thus invites scholars to go beyond measurement of aid efficiency through cost-effectiveness and economic growth and find ways to integrate both the Value for Money and the Capabilities approach.