TrAid Channeling Development Assistance to Results

Abstract

Development assistance is meant to improve the lives of poor people in developing countries, but the effectiveness of aid in meeting this goal is uncertain. Demonstrating failure — or success — is difficult because traditional donor financing mechanisms track inputs, not results. This is compounded by poor coordination between actors and a lack of transparency, accountability, and country ownership. Development assistance that is ineffective or has unknown outcomes wastes resources, erodes the constituency for aid, and most importantly fails to improve the lives of poor people as much as it could. TrAid is a new mechanism that aims to address these problems by creating a market for certified development outputs — outputs for which both the delivery and the quality have been verified. By ensuring that these outputs, such as safe deliveries or gas connections, meet certain standards, trAid acts as a third-party stamp of approval that donors, tax payers, recipient-country governments, service providers, and beneficiaries can trust to know that their aid is being used effectively and is contributing to the development objectives of the recipient country. And trAid makes all information accessible online, making it easier for funders to link with projects that are working and projects that are working to link with anyone interested in purchasing certified development outputs. TrAid can be tailored to any sector where outputs can be clearly defined and measured, whether health, education, infrastructure, or agriculture. This paper describes the trAid concept in detail and proposes practical steps to establish the trAid platform.

Keywords: foreign aid, accountability, markets, transparency

JEL Classification: F35, O19