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Chapter 3: Linking Spending and Outcomes

Chapter Highlights

Development assistance for health and education has risen to unprecedented levels in volume, but has not generated the expected improvements in outcomes. This requires closer attention to the causal chain linking spending to outcomes and actions to isolate and strengthen the weak links in this chain. In recent years impact evaluations have emerged as a tool to do this, and even though their evidence base is still far from complete, some interesting lessons are beginning to emerge.

Impact evaluations highlight the disconnect between increased public spending and changes in outcomes. The outcomes have been disappointing partly because the spending focus has been narrowly trained on input provision, ignoring other parts of the causal chain that links public spending to better outcomes. Too much effort has been devoted to increasing inputs, and not enough to ensuring that institutions provide services efficiently and responsively—and that consumers have the ability and incentive to use services efficiently and hold service providers accountable for quality.

Although designing the right approach to improving outcomes is complex and depends on context, a systematic evidence base generated through rigorous impact evaluations can provide useful guidance for policy makers. The information base on impact evaluations is far from complete, and much more work is needed before the most pressing questions can be answered. But some new approaches show promise in improving incentives and in strengthening the accountability of service provision, as illustrated by the more than 100 research papers reviewed in this chapter.

There are several initiatives in the World Bank to improve the quality of evidence to inform development practice. One example is the Development Impact Evaluation (DIME) initiative. It is a broad-based, decentralized effort to mainstream impact evaluation in the World Bank. The aim is to improve the effectiveness of policies and programs, strengthen country capacity for evidence-based policy making, and generate knowledge in 15 development areas, including in health and education.

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