Can Results-Based Payments Reduce Corruption?-Working Paper 345
AbstractA common objection to results-based programs is that they are somehow more vulnerable to corruption. This paper explains why results-based approaches to foreign aid may be less vulnerable to corruption than the traditional approaches which monitor and track the purchase and delivery of inputs and activities. The paper begins by classifying different corruption costs and specifically distinguishes the problem of diverted funds from the costs associated with failing to generate benefits. It then characterizes the key differences between traditional input-tracking programs and results-based approaches in terms of how they are supposed to work, the implicit risks that preoccupy designers, how they function in practice, and what this means both for the scale of corruption and the realization of benefits. It then considers the conditions under which one approach or another might be more appropriate. The paper concludes that input-tracking approaches are vulnerable to corruption because they have high failure costs and a weak track record for controlling diverted funds. By contrast, results-based approaches are less prone to failure costs and limit the capacity of dishonest agents to divert funds unless those agents first improve efficiency and outputs.
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Bibliographic InfoPaper provided by Center for Global Development in its series Working Papers with number 345.
Length: 30 pages
Date of creation: Sep 2013
Date of revision:
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Web page: http://www.cgdev.org
Corruption; aid effectiveness; results-based aid; results based financing; forensic economics; cash on delivery aid;
Find related papers by JEL classification:
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- F35 - International Economics - - International Finance - - - Foreign Aid
- O20 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - General
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-01-17 (All new papers)
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