This report is published in Sida Studies in Evaluation, a series comprising methodologically oriented studies commissioned by Sida. A second series, Sida Evaluation, covers evaluations of Swedish development co-operation. Both series are administered by the Department for Evaluation and Internal Audit, an independent department reporting directly to Sida's Board of Directors. Foreword -Does 'aid' itself create incentives that undermine sustainability? This is the provoking question underlying the present study, which explores how the incentives that arise in the system of development co-operation affect sustainable outcomes.
Reports may beThe point of departure is the view that many development problems in countries where foreign 'donors' operate are caused by weak or so-called perverse incentives for local actors to engage in collective action for their common good. In turn these perverse incentives are to a large extent rooted in unfavourable institutional circumstances. Sustainable solutions to development problems require institutional conditions that shape incentives for collective action, and development co-operation may promote the creation of such favourable institutions. However, it may also create or reinforce perverse incentives that prevent sustainable outcomes. In order to better understand any such 'donor'-imposed constraints to development, Sida's Department for Evaluation and Internal Audit, which is an independent department reporting directly to Sida's Board of Directors, commissioned the present study. It was conducted by a research team from the Workshop in Political Theory and Policy Analysis at Indiana University, headed by the internationally acknowledged political scientist Professor Elinor Ostrom.The contribution of the study is manifold: First of all, it introduces an institutional perspective on development and development co-operation that is partly novel to Sida and the rest of the 'aid' community. This perspective highlights the importance of incentives and increases our understanding of incentive problems within developing-country contexts as well as within the system of 'aid' itself. Secondly, the study provides a method and tools for institutional analysis and evaluation of the relationship between 'aid', incentives and sustainability. It illustrates theoretically how these tools can be used to analyse incentives within the complex system of 'aid', associated e.g. with 'donor-recipient' negotiations and with different 'aid' modalities. Finally, the study applies the method empirically, by initiating an analysis and evaluation of the incentive structure and its causes within Sida and five Sida-supported projects in India and Zambia. The analysis is based on interviews of more than 175 persons within Sida and Sida-supported activities and a thorough literature survey. The study concludes by drawing lessons and recommending Sida an agenda for action.A central argument of the study is that Sida can contribute to more sustainable outcomes, through 1) a more explicit and systematic und...