The Future of Development Assistance : Common Pools and International Public Goods

This essay focuses on the future of multilateral development assistance, in light of the lessons of aid effectiveness in the last fifty years, and bearing in mind emerging development issues. It examines the rationale for multilateral forms of assistance, going back to the Bretton Woods conference, and argues that the multilateral approach has been successful in some areas, such as pooling of lending risks, but not in others, such as controlling free-rider problems through common conditionality. For emerging development issues, particularly those of international public goods, multilateralism seems to be the logical venue for coordination. However, the free-rider problems of the past will be present even more strongly in this arena and these need to be taken into account in designing institutions of the future. The essay concludes by suggesting reform of the multilateral assistance system to make it a more effective global instrument for dealing with the development problems of the next century.

.Ravi Kanbur is T.H. Lee Professor of World Affairs at Cornell University. Todd Sandler is Distinguished Professor of Economics at Iowa State University.