Abstract
AbstractThis article questions the relevance of the different measures of policy performance that are currently used by international organizations to allocate development aid. It evaluates more especially the pertinence of the World Bank’s Country Policy and Institutional Assessment (CPIA). Using a cross-country panel dataset over 146 countries between 1977 and 2008, I show that while the CPIA is correlated with current growth, it is not a good predictor for future growth. I then discuss the relevance of several instruments for aid allocation. In particular, I propose a performance indicator based on “aid effectiveness” to allocate aid selectively, and discuss a new way of assessing time-varying aid effectiveness.
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