We need a NICE for global development spending

Abstract

With aid budgets shrinking in richer countries and more money for healthcare becoming available from domestic sources in poorer ones, the rhetoric of value for money or improved efficiency of aid spending is increasing. Taking healthcare as one example, we discuss the need for and potential benefits of (and obstacles to) the establishment of a national institute for aid effectiveness. In the case of the UK, such an institute would help improve development spending decisions made by DFID, the country's aid agency, as well as by the various multilaterals, such as the Global Fund, through which British aid monies is channelled. It could and should also help countries becoming increasingly independent from aid build their own capacity to make sure their own resources go further in terms of health outcomes and more equitable distribution. Such an undertaking will not be easy given deep suspicion amongst development experts towards economists and arguments for improving efficiency. We argue that it is exactly because needs matter that those who make spending decisions must consider the needs not being met when a priority requires that finite resources are diverted elsewhere. These chosen unmet needs are the true costs; they are lost health. They must be considered, and should be minimised and must therefore be measured. Such exposition of the trade-offs of competing investment options can help inform an array of old and newer development tools, from strategic purchasing and pricing negotiations for healthcare products to performance based contracts and innovative financing tools for programmatic interventions.