Payment by Results in Development Aid : All That Glitters Is Not Gold

Payment by Results (PbR), 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 pas...

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Main Author:	Clist, Paul
Format:	Journal Article
Published:	Published by Oxford University Press on behalf of the World Bank 2018
Subjects:	FOREIGN AID DEVELOPMENT AID CONDITIONALITY PERFORMANCE INCENTIVES CONTRACT THEORY AID EFFECTIVENESS
Online Access:	http://hdl.handle.net/10986/29310

id	okr-10986-29310
recordtype	oai_dc
spelling	okr-10986-293102021-05-25T10:54:43Z Payment by Results in Development Aid : All That Glitters Is Not Gold Clist, Paul FOREIGN AID DEVELOPMENT AID CONDITIONALITY PERFORMANCE INCENTIVES CONTRACT THEORY AID EFFECTIVENESS Payment by Results (PbR), 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 analyze 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. 2018-02-02T19:55:00Z 2018-02-02T19:55:00Z 2016-08 Journal Article World Bank Research Observer 1564-6971 http://hdl.handle.net/10986/29310 CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Published by Oxford University Press on behalf of the World Bank Publications & Research :: Journal Article Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
topic	FOREIGN AID DEVELOPMENT AID CONDITIONALITY PERFORMANCE INCENTIVES CONTRACT THEORY AID EFFECTIVENESS
spellingShingle	FOREIGN AID DEVELOPMENT AID CONDITIONALITY PERFORMANCE INCENTIVES CONTRACT THEORY AID EFFECTIVENESS Clist, Paul Payment by Results in Development Aid : All That Glitters Is Not Gold
description	Payment by Results (PbR), 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 analyze 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.
format	Journal Article
author	Clist, Paul
author_facet	Clist, Paul
author_sort	Clist, Paul
title	Payment by Results in Development Aid : All That Glitters Is Not Gold
title_short	Payment by Results in Development Aid : All That Glitters Is Not Gold
title_full	Payment by Results in Development Aid : All That Glitters Is Not Gold
title_fullStr	Payment by Results in Development Aid : All That Glitters Is Not Gold
title_full_unstemmed	Payment by Results in Development Aid : All That Glitters Is Not Gold
title_sort	payment by results in development aid : all that glitters is not gold
publisher	Published by Oxford University Press on behalf of the World Bank
publishDate	2018
url	http://hdl.handle.net/10986/29310
_version_	1764469025230815232

Payment by Results in Development Aid : All That Glitters Is Not Gold

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