and possibly ineffective environments, and may undermine incentives for better performers. Fragile states—failed states or countries with very weak governance, where need is often greatest—clearly need aid, but require a different approach. The global community is still working to improve practices in In terms of trends in how aid is approached and organized, a partnership model focused on country ownership and performance based aid is becoming increasingly popular. It typically applies one or both of the following principles:

Country ownership, which requires that donors align their support with a strategy developed by recipients, moving away from intrusive policy conditionality. The March 2005 Paris Declaration embodies this principle.

Aid allocation based on country performance, which bases the level and modalities of aid on development achievements that recipients are expected to attain—including the quality of their governance and policies (including the management of financial resources)and interim indicators of future results. Within this emerging aid framework, the objective is to move aid commitments toward a contractual basis built on achieving development outcomes.

A remaining challenge is how best to balance aid allocation between rewarding and encouraging good performance and addressing urgent needs. The performance model risks focusing aid on a few countries that already perform well. A needs-based approach risks putting resources in poorly managed, inefficient, and possibly ineffective environments, and may undermine incentives for better performers. Fragile states—failed states or countries with very weak governance, where need is often greatest—clearly need aid, but require a different approach. The global community is still working to improve practices in t

th a strategy developed by recipients, moving away from intrusive policy conditionality. The March 2005 Paris Declaration embodies this principle.

Aid allocation based on country performance, which bases the level and modalities of aid on development achievements that recipients are expected to attain—including the quality of their governance and policies (including the management of financial resources)and interim indicators of future results. Within this emerging aid framework, the objective is to move aid commitments toward a contractual basis built on achieving development outcomes.

A remaining challenge is how best to balance aid allocation between rewarding and encouraging good performance and addressing urgent needs. The performance model risks focusing aid on a few countries that already perform well. A needs-based approach risks putting resources in poorly managed, inefficient, and possibly ineffective environments, and may undermine incentives for better performers. Fragile states—failed states or countries with very weak governance, where need is often greatest—clearly need aid, but require a different approach. The global community is still working to improve practices in

tain—including the quality of their governance and policies (including the management of financial resources)and interim indicators of future results. Within this emerging aid framework, the objective is to move aid commitments toward a contractual basis built on achieving development outcomes.

A remaining challenge is how best to balance aid allocation between rewarding and encouraging good performance and addressing urgent needs. The performance model risks focusing aid on a few countries that already perform well. A needs-based approach risks putting resources in poorly managed, inefficient, and possibly ineffective environments, and may undermine incentives for better performers. Fragile states—failed states or countries with very weak governance, where need is often greatest—clearly need aid, but require a different approach. The global community is still working to improve practices in

remaining challenge is how best to balance aid allocation between rewarding and encouraging good performance and addressing urgent needs. The performance model risks focusing aid on a few countries that already perform well. A needs-based approach risks putting resources in poorly managed, inefficient, and possibly ineffective environments, and may undermine incentives for better performers. Fragile states—failed states or countries with very weak governance, where need is often greatest—clearly need aid, but require a different approach. The global community is still working to improve practices in and possibly ineffective environments, and may undermine incentives for better performers. Fragile states—failed states or countries with very weak governance, where need is often greatest—clearly need aid, but require a different approach. The global community is still working to improve practices in this area.

The inter-agency Common Performance Assessment System, or COMPAS initiative is developing common systems that all multilateral development banks can use to monitor their results orientation. Its 2006 report found that: efforts to implement country strategies are still weak in some cases; that performance based grants are on the rise; that efforts to apply operational lessons of experience are not systematic enough and that multilateral development banks are starting to link salary increases of staff to the accomplishment of agreed objectives.