As aid diminishes in importance, donors need a capacity that enables governments to improve the quality of their public spending. In this study I suggest three such organizational innovations: independent ratings of spending systems, Independent Public Service Agencies, and Sovereign Development Funds. These constitute a new donor instrument of influencing the modalities of public spending, alongside the volume of aid. With an additional instrument donors can escape the dilemma of having more objectives than instruments. How aid is spent may become more important than how much of it is spent.
Collier, P. How to Spend it: The organization of public spending and aid effectiveness. UNU-WIDER, Helsinki, Finland (2012) 16 pp. ISBN 978-92-9230-468-3 [Working Paper No. 2012/05]