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In a recent blog, Duncan Green wonders if “Pay by Results” (PbR) programs are overhyped and questions whether foreign aid agencies and NGOs should be pursuing them at all. Only a few countries have stepped into this new way of doing aid. PbR may be overhyped at the same time that at least one type of PbR is underutilized.
For the first time in its seven-decade-long history, World Bank staff staged a work stoppage earlier this month. Staff are unhappy about the “Change Process,” aka the ongoing internal reorganization that President Kim initiated on his arrival at the bank now more than two years ago.
I have always chafed at the idea of “capacity building” – a donor fallback in developing countries whenever progress on a donor-financed project is slow. Too much of what donors mean by capacity building has turned out to be training sessions, workshops, and nice trips of mid-level technical staff from low-income countries to Paris, London and Washington.
In Norway last year I met with the impressive staff of one of the world’s largest and smartest NGOs. They were unhappy that Norwegian aid money was being used to discourage deforestation in Brazil instead of to immunize children and educate girls in low-income Africa—in other words, to deal with climate change rather than “development.” I countered that minimizing climate change is a crucial piece of development, and urged them to rethink the issue.
When we make presentations on COD AIDat development agencies, we are frequently told: “Oh, we’re already doing that.” The more we investigate, however, the fewer cases we find where agencies are really disbursing funds against independently verified outcomes in a hands-off fashion. We’re tempted to say “close but no cigar.”
As mentioned in our last post, aid agencies are experimenting with programs that incorporate the main features of COD Aid: paying for outputs and outcomes, giving the recipient greater discretion to spend as they see fit, independent verification, and transparency. Once these results-based programs are up and running, they face a critical test when the first results are reported. In particular, most programs create expectations by setting annual targets and are then judged relative to those targets rather than to their baseline. And this means that even successful programs will be viewed as failures (a point also made in an earlier blog). By refusing to set targets, a results-based program can avoid this pitfall. How is it that targets can create such a problem?
An increasing number of aid agencies are experimenting with programs that incorporate the main features of COD Aid: paying for outputs, giving the recipient greater discretion to spend as they see fit, independent verification, and transparency. (See our brief and book for more details). We’ve argued that the design of COD Aid programs can be rather easy, though the quality of the indicators chosen and the verification process are certainly critical to success. We have spent less time talking about what happens once the program is up and running. In particular, what happens when you find out how much progress actually occurred?