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See detailPerformance-Based Aid: Why it will probably not meet promises
Paul, Elisabeth ULg

in Development Policy Review (in press)

Performance-based aid (PBA) is increasingly advocated as a way to improve development aid effectiveness through resolving incentive issues inherent in aid relationships. Some donors use PBA together with ... [more ▼]

Performance-based aid (PBA) is increasingly advocated as a way to improve development aid effectiveness through resolving incentive issues inherent in aid relationships. Some donors use PBA together with performance-based financing arrangements within partner countries. Expectations from PBA are high – yet, while its rationale may look appealing, it is grounded on a restrictive model and flawed when taking account of real-world context. A number of problems associated to PBA have already been advanced as jeopardising its success. More fundamentally, one may question the mere appropriateness of PBA to provide incentives all along the chain from recipient governments to those who are supposed to produce results. Thus believing that PBA can have a mechanistic trickle-down incentive effect seems an illusion. [less ▲]

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See detailForeign Aid Transaction Costs: What are they and when are they minimised?
Paul, Elisabeth ULg; Vandeninden, Frieda ULg

in Development Policy Review (2012), 30(3),

'Transaction costs' are commonly referred to in the recent literature on aid effectiveness. Aid transaction costs, however, have been neither consistently defined nor measured. This article defines aid ... [more ▼]

'Transaction costs' are commonly referred to in the recent literature on aid effectiveness. Aid transaction costs, however, have been neither consistently defined nor measured. This article defines aid transaction costs as all the economic costs associated with aid management that add no value to aid delivery. This enables the 'net' transaction costs that should be minimised to be identified. An analytical framework is then developed for assessing these costs. This allows the effectiveness of different aid modalities to be compared, according to the characteristics of the aid transaction. The article shows that the choice of aid modality should depend on these characteristics and, therefore, that the minimisation of transaction costs should not be an end in itself. [less ▲]

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