Policy dialogue under the new aid approach: which role for medium-sized donors? Theoretical reflections and views from the field

The new aid approach (NAA) pays particular attention to the politico-institutional dimension of development. It is largely centred around a reform-driven governance agenda. Donors must facilitate and support reform, and this implies that they move away from micro-managed and donor-driven projects towards more aligned and harmonized modalities of aid like capacity building TA and budget support, which are allocated and spent according to recipient priorities. But the trust that donors have is seldom complete, and the quid pro quo of working with and through the recipient is a policy dialogue (PD) where donors can advise the government but also exert some pressure. In this paper we look critically at the policy dialogue between recipient government and donors in order to find out if and to what extent a medium-sized donor, can play a role and add value to the PD. To start with we enumerate seven principles that we think underlie the NAA, which we then contrast with what can be realistically expected from donors and recipient governments from a political economy perspective.