Evaluation Bias and Incentive Structures in Bi- and Multi-Lateral Aid Agencies

17 Pages Posted: 8 May 2006

See all articles by Katharina Michaelowa

Katharina Michaelowa

University of Zurich - Centre for Comparative and International Studies (CIS)

Axel Borrmann

Hamburg Institute of International Economics (HWWA)

Abstract

Evaluation is generally considered as an important tool to ensure the effective use of development aid, but it is itself subject to distortions. To derive institutional conditions conducive to effective evaluation, we develop a multi-level principal-agent model focusing on the interests of the different actors involved in the evaluation process. The model highlights two central problems: (i) the aid agencies' conflicting objectives of transparency and self-legitimization, and (ii) the potential collusion between the evaluator and the project manager. Evidence for the World Bank and different German donor agencies reveals concrete institutional requirements for a reduced evaluation bias and increased transparency.

Suggested Citation

Michaelowa, Katharina and Borrmann, Axel, Evaluation Bias and Incentive Structures in Bi- and Multi-Lateral Aid Agencies. Review of Development Economics, Vol. 10, No. 2, pp. 313-329, May 2006, Available at SSRN: https://ssrn.com/abstract=898044 or http://dx.doi.org/10.1111/j.1467-9361.2006.00320.x

Katharina Michaelowa (Contact Author)

University of Zurich - Centre for Comparative and International Studies (CIS) ( email )

Affolternstrasse 56
8050 Zurich
Switzerland

HOME PAGE: http://www.cis.ethz.ch/

Axel Borrmann

Hamburg Institute of International Economics (HWWA) ( email )

Heimhuder Strasse 71
D-20347 Hamburg, DE Hamburg 20148
Germany

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