How should donors give foreign aid? Project aid versus budget support

We develop a theoretical model to compare the two major foreign aid modalities: project aid and budget support. These two modalities have a different impact on the production of 'developmental goods'. Firstly, conditionality can be associated with budget support, but only a subset of the developmental expenses - the observable ones - can be subject to conditionality. Secondly, when using project aid, the donors control the overall allocation of the aid resources. However, we consider that, because of limited harmonisation and coordination, project aid can be associated with a cost of imperfect fit. We develop a unified framework to compare these two modalities where we allow the simultaneous utilisation of both instruments. We show that all the aid should be given via budget support, no matter whether conditionality is used or not. Furthermore, we show that the optimal use of conditionality depends on the recipient's developmental preferences, the productivity of the inputs and the level of aid compared to the recipient's budget: when these parameters are relatively high, conditionality should be enforced. Otherwise, the optimal aid allocation is such that all the aid is given through unconditional budget support. We conclude that conditionality does not always improve the aid effectiveness.conditionality - foreign aid - optimal contract

Do free-of-charge public health services impede cost recovery policies in Khartoum state, Sudan?

We carried out a household survey in Khartoum state in 2001 to analyse the characteristics of those who receive free public health services and to ascertain whether there are any impediments to cost recovery policies for health care use. Data were collected through interviews based on an adapted questionnaire. Those who had other income, always or sometimes had dependents and visited the health services twice in the previous 3 months were more likely to receive free public healthservices. This does not support claims that beneficiaries of these services are the welloff.health services; Sudan

How should donors give foreign aid? Project aid versus budget support

Working paper GATE 2008-13 ; CREPP Working paper (Research Center on Public and Population Economics, HEC School, University of Liege)We develop a theoretical model to compare the two major foreign aid modalities: project aid and budget support. These two modalities have a different impact on the production of 'developmental goods'. Firstly, conditionality can be associated with budget support, but only a subset of the developmental expenses - the observable ones - can be subject to conditionality. Secondly, when using project aid, the donors control the overall allocation of the aid resources. However, we consider that, because of limited harmonisation and coordination, project aid can be associated with a cost of imperfect fit. We develop a unified framework to compare these two modalities where we allow the simultaneous utilisation of both instruments. We show that all the aid should be given via budget support, no matter whether conditionality is used or not. Furthermore, we show that the optimal use of conditionality depends on the recipient's developmental preferences, the productivity of the inputs and the level of aid compared to the recipient's budget: when these parameters are relatively high, conditionality should be enforced. Otherwise, the optimal aid allocation is such that all the aid is given through unconditional budget support. We conclude that conditionality does not always improve the aid effectiveness

Physicians self selection of a payment mechanism: Capitation versus fee-for-service

The main question raised in this paper is whether GPs should self select their paymentmechanism or not. To answer it, we model GPs' behavior under the most commonpayment schemes (capitation and fee-for-service) and when GPs can select one amongthose. Our analysis considers GPs heterogeneity in terms of both ability and sense ofprofessional duty. We conclude that when savings on specialists costs are the mainconcern of a regulator, GPs should be paid on a fee-for-service basis. Instead, whenfailures to identify severe conditions are the main concern, then payment self selection byGPs can be optimal.GPs; gatekeeping; payment scheme; self selection; ability; professional duty

External referencing and pharmaceutical price negotiation

External referencing (ER) imposes a price cap for pharmaceuticals based on prices of identical products in foreign countries. Suppose a foreign country (F) negotiates prices with a pharmaceutical firm while a home country (H) can either negotiate independently or implement ER based on the foreign price. We show that country H always prefers ER if (i) it can condition ER on the drug being subsidized in the foreign country and (ii) copayments are higher in H than in F. H's preference isreinforced when the difference between country copayments is large and/or H's population is small. External referencing by H always harms F if (ii) holds, but less so if (i) holds.pharmaceuticals ; external referencing ; price negotiation

Do free-of-charge public health services impede cost recovery policies in Khartoum state, Sudan?

International audienceWe carried out a household survey in Khartoum state in 2001 to analyse the characteristics of those who receive free public health services and to ascertain whether there are any impediments to cost recovery policies for health care use. Data were collected through interviews based on an adapted questionnaire. Those who had other income, always or sometimes had dependents and visited the health services twice in the previous 3 months were more likely to receive free public healthservices. This does not support claims that beneficiaries of these services are the welloff

Treatment and referral decisions under different physician payment mechanisms

International audienceThis paper analyzes and compares the incentive properties of some common payment mechanisms for GPs, namely fee for service (FFS), capitation and fundholding. It focuses on gatekeeping GPs and it specically recognizes GPs heterogeneity in both ability and altruism. It also allows inappropriate care by GPs to lead to more serious illnesses. The results are as follows. Capitation is the payment mechanism that induces the most referrals to expensive specialty care. Fundholding may induce almost as much referrals as capitation when the expected costs of GPs care are high relative to those of specialty care. Although driven by nancial incentives of different nature, the strategic behaviours associated with fundholding and FFS are very much alike. Finally, whether a regulator should use one or another payment mechanism for GPs will depend on (i) his priorities (either cost-containment or quality enhancement) which, in turn, depend on the expected cost difference between GPs care and specialty care, and (ii) the distribution of proles (diagnostic ability and altruism levels) among GPs

La Médecine personnalisée

International audienc

Health Services: Incentives and Access. Keynote speech

International audienc

Drug approval decision times, international reference pricing and strategic launches of new drugs

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