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This Working Paper frames a new branch of research by the Budget Strengthening Initiative (BSI) and the Center for Aid and Public Expenditure (CAPE) looking into how aid can best contribute to improving the delivery of public services in developing countries.

It proposes a new way of conceptualising and distinguishing the delivery of aid that takes into account governance constraints in service and infrastructure delivery.

Few would argue that governance constraints do not affect the adequate provision of public services in developing countries. Yet the way aid modalities have usually been distinguished pays insufficient attention to these governance constraints. In doing so, almost no attention is given to whether or not aid is effective in fostering strong incentives for performance, especially in state organisations and those charged with managing and delivering services.

This paper offers a first step to address this challenge, by laying out a new approach for exploring how aid programmes have been, and can be, designed to address more deliberately the institutional framework of service and infrastructure. It makes use of an analysis of governance constraints carried out by the Politics and Governance team and the Africa Power and Politics Programme at ODI, and adds to it a broader method of distinguishing and assessing the effectiveness of aid.

The overall aim of the wider research is to identify better ways to deliver aid so that it fosters improved incentives for performance and - ultimately - delivers better results.