In a post
Duncan Green, who initially brought my attention to the Green Paper, has dug up some information on the European Commission’s Millennium Contracts program, which is similar conceptually to Cash on Delivery, except more general:
In May 2008, the European Commission (thatâ€™s Europeâ€™s official machinery, as opposed to its national governments) introduced â€˜MDG contractsâ€™. These link at least 15% of the ECâ€™s direct budget support (i.e. money that goes straight to governments, rather than to specific projects or ministries) to performance in achieving the Millennium Development Goals. Not only that, but theyâ€™re doing it at scale â€“ the EC is the worldâ€™s biggest multilateral aid donor (bigger than the World Bank), and a third of all its aid is in the form of budget support â€“ tens of billions of $ a year.
Read the rest of the post here. I’m not entirely convinced that the MGD contracts are in the same basket – although they both fall into the murky world of sticks and carrots. Neither, apparently, are the folks at CGD, who quickly replied to Green’s post. Their reply makes sense, although part of it leapt out at me as being a bit dodgy, during the discussion about the positives behind COD:
…the potential for one or more donors, private as well as public, to offer exactly the same contract to one or more developing countries.
Eep! The folks at CGD might want to have a healthy read through Avinash Dixit’s review of incentive problems in the public sector – incentives are much more difficult to dole out when we have multiple principals all trying to offer contracts to the same agent.
Update: In the comments section Ayah Mahgoub from the CGD points out that the idea is to have multiple donors invest in the same contract (not multiple contracts through multiple donors), which makes much more sense! Also the CGD has already carefully looked into the GAVI case here.