Conditionalities and the performance of European structural funds : a principal-agent analysis of control mechanisms in EU cohesion policy

In the context of debates on the performance of EU Cohesion policy, this paper considers how the EU has used control mechanisms to influence the use of Structural Funds by Member States. Using the principal-agent model, this paper examines empirically three case studies of conditionalities applied to the absorption of funding (decommitment rule), outcomes of interventions (performance reserve) and targeting of expenditure (earmarking) in EU programmes over the 2000-13 period. The findings reveal different levels of effectiveness of the three conditionalities, attributable to the differential scope for trade-offs during the regulatory negotiations, external pressure and principal self-interest. From a policy perspective, the paper discusses an effectiveness threshold for introducing controls, the tensions between multiple conditionalities, and the limitations of top-down control mechanisms in influencing agent behaviour

Performance-Based Aid: Why it will probably not meet promises

Performance-based aid (PBA) is increasingly advocated as a way to improve development aid effectiveness through resolving incentive issues inherent in aid relationships. Some donors use PBA together with performance-based financing arrangements within partner countries. Expectations from PBA are high – yet, while its rationale may look appealing, it is grounded on a restrictive model and flawed when taking account of real-world context. A number of problems associated to PBA have already been advanced as jeopardising its success. More fundamentally, one may question the mere appropriateness of PBA to provide incentives all along the chain from recipient governments to those who are supposed to produce results. Thus believing that PBA can have a mechanistic trickle-down incentive effect seems an illusion.GRAP-PA Sant