The international community plays an important role in providing technical and financial support to developing countries. From 1998 to 2003, official development assistance increased by more than one-third, to US$76 billion (World Bank 2005). There has been a concerted effort by donors in the last decade to focus more on poverty reduction in the broadest sense, and most aid agencies are now actively working to support the Millennium Development Goals (MDGs).

Accompanying this move towards a greater poverty focus has been a shift by donors away from funding individual projects and toward more programmatic support. While this is a welcome development, many countries still formally “tie” their aid, requiring it to be used to purchase goods or professional services from the donor country. This has been estimated to reduce aid effectiveness by roughly 25 percent compared to untied aid (World Bank 2005). Technical assistance (TA) is earmarked in many aid packages to provide countries with the knowledge to utilize aid effectively; in 2003 it accounted for more than 25 percent of all aid transfers. While TA can build capacity in developed countries, it can also divert much-needed funds away from their intended recipients. For example, records from the United Kingdom Department for International Development reveal that the 34 largest recipients of its TA contracts are private firms in developed countries (Greenhill and Watt 2005:22).

There has been an ongoing international campaign to reduce the debt that many low-income countries have accumulated over the years. Some debt relief has been forthcoming, but many argue that more is needed (UNDP 2003:14-15, 49). Advocates of development assistance worry, however, that aid agencies measure debt relief in a way that exaggertes its importance relative to other types of aid, since it does not represent actual monetary transfers to a country or contribute directly to poverty reduction (Greenhill and Watt 2005:20).