The overall goal of this program is to conduct research on policy options to have more efficient targeting of investment resources, to finance the required investment, and to improve efficiency within the agencies that provide public goods and services.

Project Rationale

Developing countries and the international development community are intensifying their efforts by increasing and redirecting resources in order to achieve the Millennium Development Goals (MDGs). In 2002, at the Monterrey Conference, rich countries renewed their pledge to increase their development assistance to 0.7 percent of their GDP. More recently, the UN Millennium Project called for a ‘big push’ in donor support to meet the MDG challenge. In 2005, the Commission for Africa called for rich countries to double their aids to Africa and to cancel debts poor countries owe to rich countries. Through the Millennium Challenge Act of 2003, the U.S. government pledged a 50 percent increase over its existing $10 billion annual funding for U.S. development and humanitarian assistance. So far 18 developing countries have benefited and signed compacts with the Millennium Challenge Corporation (MCC) totaling more than US$6.3 billion to be allocated across various economic and social sectors; and 23 more are eligible to benefit. More importantly, many developing countries have adopted the concept of Poverty Reduction Strategy Papers (PRSPs), or equivalent strategies, to outline strategic plans and to earmark financial resources to achieve their poverty reduction goals. In Africa, the New Partnership for Africa's Development (NEPAD) was formed by the Assembly of Heads of State and Government in July 2001 in Zambia, with the objective is to commit themselves to a new partnership in development by improving their governance through peer-review monitoring and evaluation systems; and the leaders pledged to allocate 10 percent of their national budgetary resources towards the implementation of the Comprehensive Africa Agriculture Development Programme (CAADP).

If all these resources are in place, the key questions are: can these pledged resources achieve the stated objectives of growth and poverty reduction? How should these resources be allocated among different sectors such as agriculture, infrastructure, health, and education? What types of public spending programs (and under what conditions) have the largest impact on the poor? Do public institutions that implement public spending or investment matter?