THE OPERATIONAL DIMENSIONS OF RESULTS‐BASED FINANCING
| Published date | 01 December 2014 |
| Date | 01 December 2014 |
| Author | Ravi Kanbur,Thomas O'Brien |
| DOI | http://doi.org/10.1002/pad.1698 |
THE OPERATIONAL DIMENSIONS OF RESULTS-BASED FINANCING
THOMAS O’BRIEN
1†
AND RAVI KANBUR
2
*
1
The World Bank, Washington, DC 20433, USA
2
Charles H. Dyson School of Applied Economics and Management, and Department of Economics, Cornell University, Ithaca, NY 14853-7801,
USA
SUMMARY
As part of a growingfocus on the effectivenessof development assistance fromthe World Bank and other agencies,new efforts are
being made to relate development finance moreclosely to outcomes achieved ratherthan to inputs used, through theresults-based
financing approach. We provide a framework for analyzing the operational dimensions of results-based financing, including the
conditions that suit this approach, and how best to define, measure, and report results. We review some of the early World Bank
experience with thisapproach. Noting that this approach is asyet not fully tested, we suggest evaluative issues for future research
while highlighting strengths and challenges in the range of techniques adopted so far.Copyright © 2014 John Wiley & Sons, Ltd.
key words—results-based financing; development assistance; disbursement indicators; World Bank
INTRODUCTION
The object of development assistance in low-income and middle-income countries is to achieve good outcomes in
development. And yet much, if not most, development assistance processes are focused on inputs rather than
outputs and outcomes. This is seen most clearly in the procedures for disbursing funds for investment
projects financed by bilateral and multilateral development agencies. The disbursement is tied to expenditures on
inputs—road building materials rather than kilometers of road built or transport time reduced or hospital equipment
rather than reduced infant and maternal mortality. Accompanying the focus on inputs is the huge attention paid to
procurement protocols and their monitoring. Although “value for money”in purchasing inputs is the rationale for
specific procurement conditions, this approach does not forcefully focus attention on what the investment is for and
how it should ultimately be judged, namely, development outcome per unit of finance.
So practitioners and researchers ask: Are there better ways of delivering development assistance, and what
operational issues emerge? Dissatisfaction with the input-focused perspective of development assistance has led
to an evolution of experimentation with mechanisms that link disbursement of funds more closely to outputs
and outcomes than to inputs. This has echoes in the “service level delivery”drive in several Organisation for
Economic Co-operation and Development countries that has sought to obtain better delivery of public service to
citizens by incentivizing government agencies on output-related performance metrics.
1
Some have argued that this service delivery drive has clearly made administrations more accountable—to
beneficiaries and political leaders—and that it has generated a sharper focus on results within government.
2
In
New Zealand, for example, a long-term drive for public administration reform has been underpinned by outcome-
*Correspondence to: R. Kanbur, Charles H. Dyson School of Applied Economics and Management, and Department of Economics, Cornell
University, 301J Warren Hall, Ithaca, NY 14853-7801, USA. E-mail: sk145@cornell.edu
†
The views expressed in this paper are solely those of the authors, andshould not be attributed to The World Bank; its Board of Directors; or the
countries they represent.
1
The UK Prime Minister’s Performance and Innovation Unit provides one example, with New Zealand and Chile being other good illustrations.
2
Roberts (2003) and OECD (2007).
public administration and development
Public Admin. Dev. 34, 345–358 (2014)
Published online 25 August 2014 in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/pad.1698
Copyright © 2014 John Wiley & Sons, Ltd.
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