Reducing the Transaction Costs of Development Assistance : Ghana’s Multi-Donor Budget Support (MDBS) Experience from 2003 to 2007
This paper examines whether the structure of the Multi-Donor Budget Support (MDBS) in Ghana evolved over time to minimize transaction costs commonly found in accessing and delivering development assistance in multi-donor settings. While the MDBS w...
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2007/11/8744884/reducing-transaction-costs-development-assistance-ghanas-multi-donor-budget-support-mdbs-experience-2003-2007 http://hdl.handle.net/10986/7649 |
| Summary: | This paper examines whether the
structure of the Multi-Donor Budget Support (MDBS) in Ghana
evolved over time to minimize transaction costs commonly
found in accessing and delivering development assistance in
multi-donor settings. While the MDBS was expected to reduce
the transaction costs involved in dealing with multiple
development agencies, it created three additional sources of
transaction costs: coordination failures, the costs of
collective action, and measurement costs. The answer that
emerges from this paper is that the structure of the MDBS
evolved to mitigate these transaction costs. The problems
associated with coordination was addressed by delegating the
policy dialogue to sector-specific groups aimed at reaching
agreements over a narrower set of issues and amongst a
smaller group of participants. Also, the MDBS reduced the
cost of collective action by devising rules that allowed all
the participating agencies to have a role in the
decision-making process, and, in doing so, encouraged these
agencies to increase the share of their contribution coming
through the MDBS, rather than through large projects and
off-budget disbursements. There was less success in reaching
a settled view on how to reduce so-called measurement costs,
however. While the group of development agencies made
several attempts to overcome the difficulties in measuring
progress in the program supported by the MDBS, it was not
able to reach consensus on the extent to which the
monitoring of the program should rely on outcome indicators.
The Government did not favor the use of outcome indicators,
and some development agencies placed greater emphasis on
maintaining a dialogue around policy actions aimed at
reaching the desired outcomes. |
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