This paper studies a simple reform that introduces ex post incentives for the donor to reward good policies - contrary to existing practices. Instead of committing aid to each recipient ex ante and making aid conditional on reform, the donor centralizes the disbursement decision by committing...

"The paper identifies a set of core concepts that reflect key "political economy" factors shaping the policy reform process that can assist in guiding the policy-based lending (PBL) design process. It discusses the recurring themes that constrain the effectiveness of PBL, reviews from a...