Harnessing the power of incentives: a framework for increasing aid effectiveness by design

Harnessing the power of incentives: a framework for increasing aid effectiveness by design

Harnessing the aid cycle to get the most out of the actors involved

The authors present a conceptual framework called 'Harnessing the Power of Incentives' and include techniques that USAID may use both to reduce the risk of having their interventions “hijacked” or blunted by uncooperative collaborators as well as to turn these embedded incentives to their own advantage.

The framework comprises several levels of analysis, each addressing different aspects of the aid program cycle:

  • the macro level looks across activities and countries and identifies donor, recipient country, implementer, and activity characteristics that enhance the probability of a successful intervention or increase the likelihood of failure
  • the meso level identifies the interests of actor organizations and the games they play. With it, USAID can better manage its interactions with other organizations
  • the micro level highlights the games and incentives facing the individual decision-makers within each organisation and how these internal incentive structures may ultimately lead to stable but inefficient– and even perverse – aid outcomes

Finally, the authors suggest the rudiments of an evaluation process comprising indicators and an experimental design, which would support aid effectiveness incentives at each of the three levels.

The authors lay out a series of practical steps to implement an HPI application, with special attention to the different internal objectives and requirements of USAID administrative processes and their time and human resource constraints.

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