ABSTRACT
Thirdly, as in the case of aid-tying, the D A C is the main forum in which donors should try to reach agreement on suitable terms for aid in general, and also for particular countries, except where more specialized bodies such as C I A P or the various consortia exist. Lack of co-ordination in the past, and excessive optimism as to poor countries' capacity to repay debt and grow fast, has led and is leading to very embarrassing and difficult situations. 1 There is now much greater recognition of the problem than a year or two ago, and the D A C has made some progress. What is primarily needed, as in the case of aid-tying, is a greater recognition on the part of the hard donors of the collective interest of the West in a smooth and amicable transfer of resources for development, the political impact of which should not be damaged by frequent renegotiations of debt with all the potentiality for ill-will which they engender. The U S A sets much the best example, and one hopes that other rich donors will become more willing to copy her approach. The problem is considerably com plicated by private short-and medium-term export credits, the ex cessive acceptance of which has reduced several countries to posi tions of extreme difficulty. (Ghana is one of the most recent ex amples.)
Fourthly, the D A C came into existence partly to solve the problem of 'burden-sharing'. It may have had some slight success in increasing the flow of capital from a few European countries. But we believe that attempts to find an agreed community of interest and purpose in Western aid giving, and to establish common principles, is probably a more important focus for D A C meetings than putting pressure on apparently laggard donors to increase their lending, regardless of terms. In this connection, however, it might be useful if D A C could
Fifthly, we considered how far the divergences of policy on the part of the major donors, and the lack of any unified mechanism for deciding on a rational allocation of world aid, contributed to such maldistribution of development aid as appears to exist.2 The causes of maldistribution lie more in national policies, such as the French con centration on aid to the Franc Area, and in misjudgment on the part of the other major donors of some countries' economic potentiality or political importance, than in any lack of co-ordinating mechan ism. It would probably be harmful for the D A C to discuss the dis tribution of world aid, for an apparent unification of donors' de cisions on the amounts of aid for particular recipients would tend to remove one of the advantages of bilateral aid in the latter's eyes. In any case, far fewer countries than are members of D A C effectively determine the distribution of aid. In connection with the world dis tribution of aid, we considered also the extent to which aid could and should be more diversified, in order to satisfy the desire of most recipients to avoid dependence on a single donor. While the possi bility of increased diversification is limited by the large relative size of U S A aid, Europe might increase its contribution to Latin America and the Far East, if the U S A increased its share in Africa, and possibly also in India.
