Working paper 41
Through an analysis of Ghana’s HIPC Fund, which was established as part of the Poverty Reduction Strategy Papers (PRSP) process, this paper shows how aid-financed efforts to reduce regional inequality in Ghana have failed. Dominant political elites agreed to policies of regional inequality reduction to access aid funding, but, once approved, such funds were allocated on quite different criteria in ways that marginalised the poorest. Analyses here reinforce the growing recognition that developmental outcomes in most poor countries are not shaped so much by the design of ‘good’ policies per se, but more importantly by the power relationships within which policy-implementing institutions are embedded. Aid donors seem unable to fully grasp this important lesson, and so their capacity to contribute to reducing regional inequality remains limited.