The Second Wave of Independence : Shopping for Solutions

In the 21st century, many developing countries will become emerging markets and will no longer be in need of the carrot-and-stick approach to development assistance most prevalent today: development financing made available conditional on certain p...

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Main Authors:	Gaarder, Marie M., Bartsch, Ulrich
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank Group, Washington, DC 2014
Subjects:	ACCOUNTABILITY AGRICULTURE AIR POLLUTION BALANCE SHEETS BENEFICIARIES BID BIDS CONTROL GROUPS DECISION MAKING DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ACTIVITIES DEVELOPMENT AGENCIES DEVELOPMENT AGENCY DEVELOPMENT AID DEVELOPMENT ASSISTANCE DEVELOPMENT BANK DEVELOPMENT BANKS DEVELOPMENT COOPERATION DEVELOPMENT EFFECTIVENESS DEVELOPMENT FINANCING DEVELOPMENT INSTITUTIONS DEVELOPMENT ISSUES DEVELOPMENT OBJECTIVES DEVELOPMENT OUTCOMES DEVELOPMENT PARTNERS DEVELOPMENT POLICY DEVELOPMENT PROJECTS DONOR AGENCY ECONOMIC RESEARCH ECONOMIC THEORY ECONOMIC VALUE ECONOMICS ECONOMICS LITERATURE EFFICIENT MARKET EMERGING MARKETS ENFORCEMENT MECHANISM EVALUATION CAPACITY EXPENDITURE EXTERNALITIES FINANCIAL MARKETS FINANCIAL RISKS GDP GOVERNMENT INTERVENTIONS HOST COUNTRIES HOST COUNTRY IMPACT EVALUATION INCOME INCOMPLETE CONTRACTS INFORMATION ASYMMETRIES INNOVATION INSURANCE INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL SETTLEMENT INVESTMENT PROJECTS LABOR FORCE LABOUR LIVING STANDARDS LOAN M&E SYSTEMS MARKET FAILURE MARKET FAILURES MARKET INSTABILITY MARKET MECHANISM MARKET PRICES MORAL HAZARD MORTALITY NEGATIVE EXTERNALITIES NEGATIVE EXTERNALITY OPTIMAL CONTRACT OPTIMAL INVESTMENT OUTPUTS POSITIVE EXTERNALITY PRINCIPAL PAYMENTS PRINCIPAL-AGENT PROBLEM PRINCIPAL-AGENT PROBLEMS PRINCIPAL-AGENT RELATIONSHIP PRINCIPAL-AGENT RELATIONSHIPS PRODUCTION FUNCTIONS PRODUCTIVITY REPAYMENT RETURN RETURNS RISK SHARING SAFETY SHAREHOLDERS SOCIAL PROGRAMS SUPPLIERS TRADING TRANSACTION WEALTH
Online Access:	http://documents.worldbank.org/curated/en/2014/10/20302964/second-wave-independence-shopping-solutions http://hdl.handle.net/10986/20495

id	okr-10986-20495
recordtype	oai_dc
spelling	okr-10986-204952021-04-23T14:03:56Z The Second Wave of Independence : Shopping for Solutions Gaarder, Marie M. Bartsch, Ulrich ACCOUNTABILITY AGRICULTURE AIR POLLUTION BALANCE SHEETS BENEFICIARIES BID BIDS CONTROL GROUPS DECISION MAKING DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ACTIVITIES DEVELOPMENT AGENCIES DEVELOPMENT AGENCY DEVELOPMENT AID DEVELOPMENT ASSISTANCE DEVELOPMENT BANK DEVELOPMENT BANKS DEVELOPMENT COOPERATION DEVELOPMENT EFFECTIVENESS DEVELOPMENT FINANCING DEVELOPMENT INSTITUTIONS DEVELOPMENT ISSUES DEVELOPMENT OBJECTIVES DEVELOPMENT OUTCOMES DEVELOPMENT PARTNERS DEVELOPMENT POLICY DEVELOPMENT PROJECTS DONOR AGENCY ECONOMIC RESEARCH ECONOMIC THEORY ECONOMIC VALUE ECONOMICS ECONOMICS LITERATURE EFFICIENT MARKET EMERGING MARKETS ENFORCEMENT MECHANISM EVALUATION CAPACITY EXPENDITURE EXTERNALITIES FINANCIAL MARKETS FINANCIAL RISKS GDP GOVERNMENT INTERVENTIONS HOST COUNTRIES HOST COUNTRY IMPACT EVALUATION INCOME INCOMPLETE CONTRACTS INFORMATION ASYMMETRIES INNOVATION INSURANCE INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL SETTLEMENT INVESTMENT PROJECTS LABOR FORCE LABOUR LIVING STANDARDS LOAN M&E SYSTEMS MARKET FAILURE MARKET FAILURES MARKET INSTABILITY MARKET MECHANISM MARKET PRICES MORAL HAZARD MORTALITY NEGATIVE EXTERNALITIES NEGATIVE EXTERNALITY OPTIMAL CONTRACT OPTIMAL INVESTMENT OUTPUTS POSITIVE EXTERNALITY PRINCIPAL PAYMENTS PRINCIPAL-AGENT PROBLEM PRINCIPAL-AGENT PROBLEMS PRINCIPAL-AGENT RELATIONSHIP PRINCIPAL-AGENT RELATIONSHIPS PRODUCTION FUNCTIONS PRODUCTIVITY REPAYMENT RETURN RETURNS RISK SHARING SAFETY SHAREHOLDERS SOCIAL PROGRAMS SUPPLIERS TRADING TRANSACTION WEALTH In the 21st century, many developing countries will become emerging markets and will no longer be in need of the carrot-and-stick approach to development assistance most prevalent today: development financing made available conditional on certain policies and interventions. This paper suggests that interactions between development agencies and recipient governments are mostly about inputs deemed (but not known) to contribute to improvements in living standards in recipient countries, rather than outcomes. The paper argues that the development marketplace is beset by market imperfections because of externalities, principal-agent problems, and decision making under uncertainty, which not only make it difficult to achieve the right outcomes, but also take away incentives to learn about outcomes. A fundamental rethink of responsibilities and accountabilities in the development business would make sure that development outcomes are traded in the development marketplace. It would put recipient countries in charge of contracting development agencies to provide these outcomes. Development agencies would commit to and be held financially accountable for outcomes, that is, real improvements in welfare indicators. The paper describes the role of the evaluation function in aligning incentives with the ultimate goal of improving lives and provides examples of emerging solutions. 2014-10-30T20:34:57Z 2014-10-30T20:34:57Z 2014-10 http://documents.worldbank.org/curated/en/2014/10/20302964/second-wave-independence-shopping-solutions http://hdl.handle.net/10986/20495 English en_US Policy Research Working Paper;No. 7069 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Group, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ACCOUNTABILITY AGRICULTURE AIR POLLUTION BALANCE SHEETS BENEFICIARIES BID BIDS CONTROL GROUPS DECISION MAKING DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ACTIVITIES DEVELOPMENT AGENCIES DEVELOPMENT AGENCY DEVELOPMENT AID DEVELOPMENT ASSISTANCE DEVELOPMENT BANK DEVELOPMENT BANKS DEVELOPMENT COOPERATION DEVELOPMENT EFFECTIVENESS DEVELOPMENT FINANCING DEVELOPMENT INSTITUTIONS DEVELOPMENT ISSUES DEVELOPMENT OBJECTIVES DEVELOPMENT OUTCOMES DEVELOPMENT PARTNERS DEVELOPMENT POLICY DEVELOPMENT PROJECTS DONOR AGENCY ECONOMIC RESEARCH ECONOMIC THEORY ECONOMIC VALUE ECONOMICS ECONOMICS LITERATURE EFFICIENT MARKET EMERGING MARKETS ENFORCEMENT MECHANISM EVALUATION CAPACITY EXPENDITURE EXTERNALITIES FINANCIAL MARKETS FINANCIAL RISKS GDP GOVERNMENT INTERVENTIONS HOST COUNTRIES HOST COUNTRY IMPACT EVALUATION INCOME INCOMPLETE CONTRACTS INFORMATION ASYMMETRIES INNOVATION INSURANCE INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL SETTLEMENT INVESTMENT PROJECTS LABOR FORCE LABOUR LIVING STANDARDS LOAN M&E SYSTEMS MARKET FAILURE MARKET FAILURES MARKET INSTABILITY MARKET MECHANISM MARKET PRICES MORAL HAZARD MORTALITY NEGATIVE EXTERNALITIES NEGATIVE EXTERNALITY OPTIMAL CONTRACT OPTIMAL INVESTMENT OUTPUTS POSITIVE EXTERNALITY PRINCIPAL PAYMENTS PRINCIPAL-AGENT PROBLEM PRINCIPAL-AGENT PROBLEMS PRINCIPAL-AGENT RELATIONSHIP PRINCIPAL-AGENT RELATIONSHIPS PRODUCTION FUNCTIONS PRODUCTIVITY REPAYMENT RETURN RETURNS RISK SHARING SAFETY SHAREHOLDERS SOCIAL PROGRAMS SUPPLIERS TRADING TRANSACTION WEALTH
spellingShingle	ACCOUNTABILITY AGRICULTURE AIR POLLUTION BALANCE SHEETS BENEFICIARIES BID BIDS CONTROL GROUPS DECISION MAKING DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ACTIVITIES DEVELOPMENT AGENCIES DEVELOPMENT AGENCY DEVELOPMENT AID DEVELOPMENT ASSISTANCE DEVELOPMENT BANK DEVELOPMENT BANKS DEVELOPMENT COOPERATION DEVELOPMENT EFFECTIVENESS DEVELOPMENT FINANCING DEVELOPMENT INSTITUTIONS DEVELOPMENT ISSUES DEVELOPMENT OBJECTIVES DEVELOPMENT OUTCOMES DEVELOPMENT PARTNERS DEVELOPMENT POLICY DEVELOPMENT PROJECTS DONOR AGENCY ECONOMIC RESEARCH ECONOMIC THEORY ECONOMIC VALUE ECONOMICS ECONOMICS LITERATURE EFFICIENT MARKET EMERGING MARKETS ENFORCEMENT MECHANISM EVALUATION CAPACITY EXPENDITURE EXTERNALITIES FINANCIAL MARKETS FINANCIAL RISKS GDP GOVERNMENT INTERVENTIONS HOST COUNTRIES HOST COUNTRY IMPACT EVALUATION INCOME INCOMPLETE CONTRACTS INFORMATION ASYMMETRIES INNOVATION INSURANCE INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL SETTLEMENT INVESTMENT PROJECTS LABOR FORCE LABOUR LIVING STANDARDS LOAN M&E SYSTEMS MARKET FAILURE MARKET FAILURES MARKET INSTABILITY MARKET MECHANISM MARKET PRICES MORAL HAZARD MORTALITY NEGATIVE EXTERNALITIES NEGATIVE EXTERNALITY OPTIMAL CONTRACT OPTIMAL INVESTMENT OUTPUTS POSITIVE EXTERNALITY PRINCIPAL PAYMENTS PRINCIPAL-AGENT PROBLEM PRINCIPAL-AGENT PROBLEMS PRINCIPAL-AGENT RELATIONSHIP PRINCIPAL-AGENT RELATIONSHIPS PRODUCTION FUNCTIONS PRODUCTIVITY REPAYMENT RETURN RETURNS RISK SHARING SAFETY SHAREHOLDERS SOCIAL PROGRAMS SUPPLIERS TRADING TRANSACTION WEALTH Gaarder, Marie M. Bartsch, Ulrich The Second Wave of Independence : Shopping for Solutions
relation	Policy Research Working Paper;No. 7069
description	In the 21st century, many developing countries will become emerging markets and will no longer be in need of the carrot-and-stick approach to development assistance most prevalent today: development financing made available conditional on certain policies and interventions. This paper suggests that interactions between development agencies and recipient governments are mostly about inputs deemed (but not known) to contribute to improvements in living standards in recipient countries, rather than outcomes. The paper argues that the development marketplace is beset by market imperfections because of externalities, principal-agent problems, and decision making under uncertainty, which not only make it difficult to achieve the right outcomes, but also take away incentives to learn about outcomes. A fundamental rethink of responsibilities and accountabilities in the development business would make sure that development outcomes are traded in the development marketplace. It would put recipient countries in charge of contracting development agencies to provide these outcomes. Development agencies would commit to and be held financially accountable for outcomes, that is, real improvements in welfare indicators. The paper describes the role of the evaluation function in aligning incentives with the ultimate goal of improving lives and provides examples of emerging solutions.
format	Publications & Research :: Policy Research Working Paper
author	Gaarder, Marie M. Bartsch, Ulrich
author_facet	Gaarder, Marie M. Bartsch, Ulrich
author_sort	Gaarder, Marie M.
title	The Second Wave of Independence : Shopping for Solutions
title_short	The Second Wave of Independence : Shopping for Solutions
title_full	The Second Wave of Independence : Shopping for Solutions
title_fullStr	The Second Wave of Independence : Shopping for Solutions
title_full_unstemmed	The Second Wave of Independence : Shopping for Solutions
title_sort	second wave of independence : shopping for solutions
publisher	World Bank Group, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2014/10/20302964/second-wave-independence-shopping-solutions http://hdl.handle.net/10986/20495
_version_	1764445534596104192

The Second Wave of Independence : Shopping for Solutions

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