AT A GLANCE:

The international commitment to the Millennium Development Goals (MDGs) recognizes the need for scaling up the volume and quality of aid. This commitment, stemming from a global consensus reached at the 2002 UN Conference on Financing for Development in Monterrey, also calls for all development partners to share the responsibility of making aid more effective —and it calls for action on both sides of the aid relationship.

Nationally, governments are increasingly setting clear goals and targets linked to public actions, improving their budgeting and monitoring systems and embracing a more inclusive discussion of national priorities and policies. Donors are working harder to align and harmonize assistance with countries' priorities, and are trying to fill country-specific analytical gaps. Yet connecting results with resources remains a major challenge. Aid allocation based on country performance (in governance, policies and intermediate indicators of results) is on the rise.

The March 2005 Paris Declaration on Aid Effectiveness, agreed to by more than 90 countries, represents a shift from past aid practices and appears to be slowly having an impact. In 2006, indicators of donor harmonization and alignment were collected and monitored for the first time.

But at the same time, the architecture of the global aid system is becoming more complex, with the emergence of new donors and a multitude of earmarked funds. Scaling up aid to meet the MDGs requires a more coherent 'aid architecture', with better donor coordination and less fragmentation and 'ear-marking' of aid.

The global community is also working on better practices to deliver aid to fragile states, where poverty is increasingly concentrated.

Recognition is growing that governance is crucial to ensuring aid effectiveness—the 2006 Global Monitoring Report on the MDGs(GMR) proposed a framework to monitor governance, including actionable indicators. Since then, developing countries, donors and international financial institutions began adapting parts of the framework to improve practices and to get more out of their development dollars. For its part, the World Bank is undertaking a new Governance and Anti-Corruption Strategy that places issues of institutional quality, accountability and better procurement and fiduciary rules at the center of the development agenda.

The 2007 GMR assesses recent trends in official development assistance (ODA) and examines the performance of international financial institutions (IFIs), since those entities aim to serve as standard-bearers for improved aid coordination, harmonization and effectiveness.

'Confronting the Challenges of Gender Equality and Fragile States' is the theme of the 2007 GMR. The report stresses that achieving gender equality and the empowerment of women (MDG3) is essential to advancing the other millennium goals of halving poverty, primary education for all, and a lowering of the under-five mortality rate. And, improving prospects for the 485 million people living in fragile states is vital as well.