Sponsoring A Race To The Top: The Case For Results-Based Intergovernmental Finance For Merit Goods

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Intergovernmental finance is a significant source of sub-national finance in most countries. In both industrial and developing countries, formula based "Manna from heaven" general purpose transfers dominate but co-exist with highly intrusive micro-managed "Command and control" specific purpose transfers. Both these types of transfers undermine political and fiscal accountability. Reforms to bring in design elements that incorporate incentives for results-based accountability are resisted by both donors and recipients alike. This is because the donors perceive such reforms as attempts at chipping away at their powers and recipients fear such programs will be intrusive.