Payment by results In development aid: All that glitters is not gold

Clist, Paul (2016) Payment by results In development aid: All that glitters is not gold. World Bank Research Observer, 31 (2). pp. 290-319. ISSN 0257-3032

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Abstract

Payment by Results, where aid is disbursed conditional upon progress against a pre-agreed measure, is becoming increasingly important for various donors. There are great hopes that this innovative instrument will focus attention on ultimate outcomes, and lead to greater aid effectiveness by passing the delivery risk on to recipients. However, there is very little related empirical evidence, and previous attempts to place it on a sure conceptual footing are rare and incomplete. This article collates and synthesises relevant insights from a wide range of subfields in economics, providing a rich framework with which to analyse Payment by Results. I argue that the domain in which it dominates more traditional forms is relatively small and if it is used too broadly, many of the results it claims are likely to be misleading. The likelihood of illusory gains stems from the difficulty of using a single indicator to simultaneously measure and reward performance: ‘once a measure becomes a target, it ceases to be a good measure’. This does not mean PbR should not be used (indeed it will be optimal in some settings), but it does mean that claims of success should be treated with caution.

Item Type: Article
Additional Information: This is a pre-copyedited, author-produced PDF of an article accepted for publication in World Bank Research Observer following peer review. The version of record is available online at: http://wbro.oxfordjournals.org/content/early/2016/10/04/wbro.lkw005.abstract
Faculty \ School: Faculty of Social Sciences > School of International Development
Depositing User: Pure Connector
Date Deposited: 24 Sep 2016 00:08
Last Modified: 25 Jun 2020 00:03
URI: https://ueaeprints.uea.ac.uk/id/eprint/59849
DOI: 10.1093/wbro/lkw005

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