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In a recent survey, 640 development policymakers and practitioners in 100 developing countries were asked about the best ways to improve foreign aid so that it can have the most beneficial impact possible.
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?