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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| Language: | English en_US |
| Published: |
World Bank Group, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2014/10/20302964/second-wave-independence-shopping-solutions http://hdl.handle.net/10986/20495 |
| Summary: | 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. |
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