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1. Results-Based Payments Reduce the Real Costs of Corruption in Foreign Aid

Author:
Charles Kenny and William Savedoff
Publication Date:
01-2014
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
Why don't foreign aid programs simply pay recipients for attaining agreed upon results? The idea has been around for decades, but it continues to meet resistance. Some donors worry that programs that pay for outputs or outcomes would not be able to control how funds are used and would thus be vulnerable to corruption. This brief explains why results-based payment systems are actually likely to be less vulnerable to corruption than traditional input-tracking approaches by making the effects of corruption-the failure of programs to deliver results-more visible.
Topic:
Corruption, Development, and Foreign Aid

2. Can Results-Based Payments Reduce Corruption?

Author:
Charles Kenny and William Savedoff
Publication Date:
10-2013
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
A 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.
Topic:
Corruption, Development, Foreign Aid, and Governance

3. Haiti: Where Has All the Money Gone?

Author:
Vijaya Ramachandran and Julie Walz
Publication Date:
05-2012
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Since the 2010 earthquake, almost $6 billion has been disbursed in official aid to Haiti, a country with a population of just under 10 million. An estimated $3 billion has been donated to NGOs in private contributions in addition to official aid. The United States Government alone has disbursed almost $2 billion of this total amount and has pledged over $3 billion for relief and reconstruction.
Topic:
Corruption, Humanitarian Aid, Non-Governmental Organization, and Foreign Aid
Political Geography:
United States, Caribbean, and Haiti

4. The Evolution of India's UID Program: Lessons Learned and Implications for Other Developing Countries

Author:
Frances Zelazny
Publication Date:
08-2012
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
India has embarked on an ambitious new program to provide its citizens and residents a unique, official identity. The UID (Universal ID) program aims to improve the delivery of government services, reduce fraud and corruption, facilitate robust voting processes, and improve security. It is by far the largest application of biometric identification technology to date and will have far-reaching implications for other developing countries that are looking to adopt national ID programs to further social and economic development. This paper discusses the evolution of the UID program, the innovative organization and pathbreaking technology behind it, how it is being rolled out, and how robust ID is beginning to be used.
Topic:
Corruption, Crime, Democratization, Development, and Science and Technology
Political Geography:
India

5. Publishing Construction Contracts as a Tool for Efficiency and Good Governance

Author:
Charles Kenny
Publication Date:
11-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Construction is a $1.7 trillion industry worldwide, much of which is linked to publicly financed projects. Outcomes from this financing are frequently suboptimal. Cost and time escalation, as well as poor quality, are linked to weak governance and corruption, which are endemic in the sector. There is considerable evidence that transparency and oversight are potentially powerful tools to reduce the development impact of corruption. One comparatively cheap and potentially powerful tool to improve outcomes in public procurement is the regular publication of contract and implementation details. In particular, the publication of government contracts would considerably improve transparency. Publication would also provide a large stock of public intellectual capital which should (i) reduce legal costs of contracting; and (ii) help spread best practices and ease the process of learning lessons from failed approaches. The approach is feasible: some jurisdictions have already introduced it.
Topic:
Corruption, Development, Political Economy, and Infrastructure

6. Quid Pro Quo: Builders, Politicians, and Election Finance in India

Author:
Devesh Kapur and Milan Vaishnav
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
In developing countries where elections are costly and accountability mechanisms weak, politicians often turn to illicit means of financing campaigns. This paper examines one such channel of illicit campaign finance: India's real estate sector. Politicians and builders allegedly engage in a quid pro quo, whereby the former park their illicit assets with the latter, and the latter rely on the former for favorable dispensation. At election time, however, builders need to re-route funds to politicians as a form of indirect election finance. One observable implication is that the demand for cement, the indispensible raw material used in the sector, should contract during elections since builders need to inject funds into campaigns. Using a novel monthly-level data set, we demonstrate that cement consumption does exhibit a political business cycle consistent with our hypothesis. Additional tests provide confidence in the robustness and interpretation of our findings.
Topic:
Corruption, Democratization, Government, and Politics
Political Geography:
South Asia and India

7. Saving Ghana from Its Oil: The Case for Direct Cash Distribution

Author:
Todd Moss and Lauren Young
Publication Date:
10-2009
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Ghana can be considered a relative success story in Africa. We cite six variables—peace and stability, democracy and governance, control of corruption, macroeconomic management, poverty reduction, and signs of an emerging social contract—to suggest the country's admirable political and economic progress. The expected arrival of sizeable oil revenues beginning in 2011–13, however, threatens to undermine that progress. In fact, numerous studies have linked natural resources to negative outcomes such as conflict, authoritarianism, high corruption, economic instability, increased poverty, and the destruction of the social contract. The oil curse thus threatens the very outcomes that we consider signs of Ghana's success. This paper draws lessons from the experiences of Norway, Botswana, Alaska, Chad, and Nigeria to consider Ghana's policy options. One common characteristic of the successful models appears to be their ability to encourage an influential constituency with an interest in responsible resource management and the means to hold government accountable. The Alaska model in particular, which was designed explicitly to manufacture citizen oversight and contain oil-induced patronage, seems relevant to Ghana's current predicament. We propose a modified version of Alaska's dividend program. Direct cash distribution of oil revenues to citizens is a potentially powerful approach to protect and accelerate Ghana's political and economic gains, and a way to strengthen the country's social contract. We show why Ghana is an ideal country to take advantage of this option, and why the timing is fortuitous. We conclude by confronting some of the common objections to this approach and suggest that new technology such as biometric ID cards or private mobile phone networks could be utilized to implement the scheme.
Topic:
Corruption, Economics, Oil, and Poverty
Political Geography:
Africa and Ghana

8. Learning to Share: Explaining the Conditions under Which States Delegate Governance

Author:
Aila M. Matanock
Publication Date:
09-2009
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
A potential solution for weak or failing states is to enact a delegation agreement whereby a host relinquishes authority over some governance function to an external actor. Through case studies in Melanesia, I find that these arrangements can be implemented as treaties, rather than contracts, so that the external actor remains somewhat exempt from the normal procedure or law of the host state. I also generate hypotheses about the conditions under which host states and external actors enact these self-enforcing equilibria: host states request these agreements either where a major law and order problem leads to a loss of monopoly on the use of force, or where extortion or corruption leads to budgetary crisis. External actors agree to them only under the latter circumstances since this makes the reputational and actual costs of the mission lower, as judged against alternative methods for resolving the problem, and where that state also poses a specific transnational security threat.
Topic:
Corruption, Debt, Fragile/Failed State, and Governance

9. Moving Mugabe's Mountain: Zimbabwe's Path to Arrears Clearance and Debt Relief

Author:
Todd Moss and Benjamin Leo
Publication Date:
11-2009
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
Zimbabwe is embarking on a long, complex, and difficult journey to rebuild its economy, which has been shattered by years of neglect and destructive government policies. If the final political hurdles are overcome hopefully sooner rather than later—the new coalition government will be faced with making politically difficult decisions and addressing conclusively the economic ghosts of the past. One of those ghosts is more than $5 billion owed to external creditors, of which nearly 80 percent is arrears. Clearing Zimbabwe's external debt arrears and securing comprehensive debt relief will be a critical step in eventual recovery. By doing so, the government will remove a crippling burden on its budget, investment climate, and overall macroeconomic environment. More important to the success of the coalition government, it will unlock hundreds of millions of dollars in new external assistance for critical reconstruction programs that will improve the Zimbabwean people's quality of life. This paper provides a detailed overview of the arrears clearance and debt relief processes. The purpose is to spark a debate in creditor capitals and hopefully to buttress the government's analytical foundation. With a strong dedicated team of experts—and support from relevant donor agencies— the Zimbabwean government will one day conclusively address its crushing debt burden and proceed with the rebuilding of a once vibrant and proud nation.
Topic:
Corruption and Governance
Political Geography:
Africa and Zimbabwe

10. Do No Harm: Aid, Weak Institutions, and the Missing Middle in Africa

Author:
Nancy Birdsall
Publication Date:
03-2007
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The implicit assumption of the donor community is that Africa is trapped by its poverty, and that aid is necessary if Africa is to escape the trap. In this note I suggest an alternative assumption: that Africa is caught in an institutional trap, signaled and reinforced by the small share of income of its independent middle-income population. Theory and historical experience elsewhere suggest that a robust middle-income group contributes critically to the creation and sustenance of healthy institutions, particularly healthy institutions of the state. I propose that if external aid is to be helpful for institution-building in Africa's weak and fragile states, donors need to emphasize not providing more aid but minimizing the risks more aid poses for this group in Africa.
Topic:
Corruption, Development, Government, and Humanitarian Aid
Political Geography:
Africa