the world bank and human capital development the case for supporting education eduardo velez...

THE WORLD BANK AND HUMAN CAPITAL DEVELOPMENT The case for supporting education Eduardo Velez Bustillo Peking University Beijing, May 29, 2015

World Bank Mission (it has changed since 1994) Until a couple of years ago, its mission was to fight poverty for lasting results and to help people help themselves and their environment by providing resources, sharing knowledge, building capacity, and forging partnerships in the public and private sectors. Now is to end extreme poverty within a generation, by 2030, and boost shared prosperity.

World Bank Group 1 The World Bank Group consists of five institutions: 1. The International Bank for Reconstruction and Development (IBRD) 2. The International Development Association (IDA) 3. The International Finance Corporation (IFC)

World Bank Group 2 4. The Multilateral Investment Guarantee Agency (MIGA) provides political risk insurance guarantees to private sector investors and lenders. And, 5. The International Centre for the Settlement of Investment Disputes (ICSID) provides arbitration and conciliation services for governments and private, foreign investors in dispute.

Board of Directors Representatives of each member country. EDs, representing 25 chairs. France, UK, Germany, USA, Japan; and now Saudi Arabia, Russia and China. All others are groups of countries. The Independent Evaluation Group (IEG) is an independent, three-part unit within the World Bank Group. IEG-World Bank is charged with evaluating the activities of the IBRD and IDA (The World Bank), IEG-IFC focuses on assessment of IFC's work toward private sector development, and IEG-MIGA evaluates the contributions of MIGA guarantee projects and services. IEG reports directly to the Bank's Board of Directors through the Director-General, Evaluation.

The WB Group is: The worlds largest funder of education The worlds largest external funder of the fight against HIV/AIDS A leader in the fight against corruption worldwide A strong supporter of debt relief The largest international financier of biodiversity projects The largest international financier of water supply and sanitation projects

Products Financing About $22 billion (historically, but lately it went up to 40, 50, 70, 40, . Will stay in the 30-40ish) Knowledge (TA in the form of AAA: advocacy, analytical work, study visits (South-South exchange, and North-South cooperation)

Lending Amounts

In Fiscal Year 2011 The World Bank Group committed $57.3 billion, distributed in credits, loans, grants and guarantees. In Fiscal Year 2013 IBRD and IDA committed $31.6 billion ($2.7 billions for education)

Characteristics of Education Projects in 2010s About 30 loans approved About $2.0 billion but cycle by regions $507 million IBRD; $1.5 billion IDA Assessment (average year) 7 (26%) good 18 (67%) acceptable 2 (7%) marginal None poor

IBRD and IDA Lending by Region 2011

IBRD and IDA Lending by Theme 2011

IBRD and IDA Lending by Sector

IBRD top 10 borrowers

IDA top 10 borrowers

Human Development IBRD and IDA Lending by Region

Education IBRD and IDA Lending by Region

FY12 education portfolio of $9 billion with operations in 73 countries New commitments for education rose to $3 billion in 2012, up from $1.8 billion in 2011 Education Lending by Sub-Sector, 2012

FY12 education portfolio of $9 billion with operations in 73 countries New commitments for education rose to $3 billion in 2012, up from $1.8 billion in 2011

Education Policy before the 1980s 1945-1963No policy (soft sector) 1963-1980s (early)Manpower, VOCED 1966 first loan to LAC was Chile. VOCED (2.7 million). Tunisia first loan also supporting VOCED LAC secondary technical and post-secondary education because it was supposed to meet the alleged manpower needs

Education Policy in the 1980s Internal debate, confusion and lots of bricks and mortar (like in the 1970s), but: Less emphasis on:More emphasis on: PlanningAnalysis/policy ManpowerLabor force Firm labor surveysHH surveys Opinion surveysTracer studies Occupational categoriesEducational profiles Public sector onlyPrivate and informal Technical efficiencyEconomic efficiency Output-labor relationsCost-benefit analysis Skills-specific trainingGeneral training School-based trainingFirm-based training Free education/TrainingCost recovery Filling long-term skills gapsCorrecting present LM distortions

Education Strategy in the 1990s Education for All (Jomtien in 1990): - expansion of ECD - universal access to primary education - reduction in adult literacy - improving in learning achievement process of teaching and learning, quality teaching, acquisition of foundation skills, opportunities to learn more advanced skills PPP and PCP Achievement monitoring (assessments systems) and impact evaluation From hardware to software Higher education: a review of the experience

Current Education Strategy Education Systems Expansion of ECD, OOSC (pockets), Secondary and HE, including S,T&I Study/Learn from what works, but also from what does not work.. Learning for ALL -Cognitive -Non-cognitive

World Banks Education Strategy Invest Early, Invest Smartly, Invest for All http://siteresources.worldbank.org/EDUCATION/Resources/ESSU/463292-1306181142935/Chinese_Exec_Summary_2020_FINAL.pdf

Strategic Priorities for 2020

How does the WB gets there?

Two schools of thought and techniques and their influence in policy.. 1.Forecasting manpower requirements 2.Estimating the profitability of investment in education

Divergent policy advice Forecasting Profitability Expand technical vocational education and universities Expand primary education

Early exponents and practitioners 1. Forecasting = dominant World Bank, OECD, ILO, Governments of several countries with the support of these international organizations 2. Profitability= minority Academics, especially University of Chicago, Columbia, London School of Economics, then World Bank,..

Early Human Capital School (1960s) Completely different philosophy Based on economics Costs and benefits are the key variables Away from headcount towards skill quality Policy: Invest in lower levels of education

From planning to policy

Today s practice Profitability = Dominant Forecasting = Remnants

1990 s expansions Education quality Institutional framework Political economy

Economics of education A relatively new field in economics that revolutionized the way we formulate and apply education policies Brought analytical rigor to the field by documenting the many effects of education on socioeconomic development

Why Economic Analysis? Research indicates that: 1.Strong relation between quality of cost benefit/cost-effectiveness analysis and project outcomes indicative of importance of good quality analysis at design 2.Quality of fiscal impact analysis, beneficiary assessment, poverty analysis and overall economic analysis related to performance 3.Poorly prepared projects more likely to perform worse Bank-wide, projects rated poor 4X more likely to be unsatisfactory than those rated good consistent across regions Improve quality of portfolio Reduce unsatisfactory projects under supervision This lecture uses materials from George Psacharopoulos, Emmanuel Jimenez, Harry Patrinos, Elizabeth King, Luis Crouch, Emiliana Vegas, Paul Gertler and indeed, Eduardo Velez.

1. Linkage with country and general ESW 2. Quantitative analysis of alternatives 3. Financial and fiscal impact assessment 4. Cost-benefit and cost-effectiveness analysis 5. Sensitivity analysis 6. Institutional analysis 7. Poverty impact analysis 8. Environmental assessment 9. Outline of economic performance indicators/criteria 10. Overall project justification 10 Dimensions of Economic Analysis

Conceptual Framework Skills toward Employability and Productivity (STEP): An Integrated Framework for Skills Development 41

Human Capital (Skills) and Productivity Human Capital Working with ExistingDeveloping Technology BetterNew Technology Acquiring Processing New Information Knowledge

Important: Different types of skills Cognitive Skills Socio- emotional Skills Technical Skills Human Capital 43 Labor Market Outcomes

Where do we want to be? Worldwide education is seen as important

A virtuous cycle: Improved HCD contributes to growth which stimulates further HCD Supply of skills - Quality education - Improved health -Adequate social protection - Inclusiveness Skills Outcomes Demand for skills - Business environment - Employment opportunities - Innovation and entrepreneurial capacity Productivity Economic Growth Competitiveness

Rate of Return Not Applicable Sector Rates of Return Sector RoR and Project- Specific C/B Project Specific RoR Pre-1990s ECON Reports 1992 Priorities and Strategies, 1995 2000 First Economics of Education Course Ranking Education Projects Evolution of the Application of Economics in Education Projects 2013

Overall Ranking of Projects in the Education Sector Improved 0 20 40 60 80 100 Good and Acceptable Marginal and Poor CY93 FY13

Performance in the 2000s

Recent Performance In the 2010s (with more projects and less staff) fortunately performance as good as in the 1990s However, too many are just acceptable

Education for Poverty Reduction & Shared Prosperity Education is one of the most powerful instruments for reducing poverty and inequality, and laying basis for sustained growth

The State of Education 1. Challenge of promoting learning 2. Growth in alternative models 3. Evidence base expanding

Returns to schooling 10%

Increased Focus on Measurement TIMSS PISA

Many More in School But Learning? Half the students in middle-income countries lack the skills to succeed in further education or work

Growing Market for Education

Private Sector Growth 59 Private enrollment as % of total student enrollment Source: World Bank 2013 Low income countries Middle income countries High income countries

Evidence Revolution

More Evidence 300 impact evaluations http://datatopics.worldbank.org/EdStatsApps/Edu%20Evaluation/evalu ationHome.aspx?sD=E

How to Translate into Policy?

Education inputs Learning for All Quality of policies & instituti ons Quality of policy implem en- tation Quality & quantit y of educati on deliver ed Systems Approach

Supporting innovative approaches to education systems research SABER in Action Thailand

Increasing capacity amid adversity SABER in Action Resilience

Informing partner engagement around the world SABER in Action WFP

Systems Approach for Better Education Results SABER www.worldbank.org/education/saber

8. Motivating teachers to perform 1. Setting clear expectations for teachers 2. Attracting the best into teaching 3. Preparing teachers with useful training and experience 4. Matching teachers skills with students needs 5. Leading teachers with strong principals 6. Monitoring teaching and learning 7. Supporting teachers to improve instruction Effective Teachers 8 Goals of effective teacher policy systems

22 Teachers Available 6 School Autono my in process 13 domains available 12 8 country reports 15 Student Assessm ent 10 2 applicati ons in Africa 20 Private Sector in process 4 regional reports 21 ECD available 98 country reports 16 applicati ons Nigeria 11 applicati ons Pakistan 7 applicati ons Uganda 48 applicati ons in East Asia 45 applicati ons in Europe & Central Asia 34 application s in Middle East/N. Africa 10 applicati ons in Americas & Caribbea n 25 applicati ons in South Asia 148 countries 300+ engagements 9,800 related data points SABER

What works? Analytical work, practical evidence, and know-how related to education programs and policies are critical to improving the performance of education systems around the world

System assessment and benchmarking tools, along with data, to assess the capacity of an education system to improve learning outcomes Impact evaluations and other analytical work that can inform policies and interventions

The Bank has come a long way in the use of Impact Evaluations More than 211 completed impact evaluations 324 active impact evaluations applied in 72 countries

With 13 IBRD Impact Evaluations and 54 IDA Evaluations And Education leads the way..

But remember it was not always the case..

People 9,000 staff from 168 countries (2/3 in HQ) + a number of consultants (could be 7,000 but varies) 124 Country Offices (Decentralization from late 1990s) Human Resources: From Regular Staff to Fixed-term staff (since about 2008) Benefit package IMPLICATIONS FOR FUTURE STAFF

Where they come from? USA2999 Indian1682 French 486 Chinese 465 Filipinos 417 British 394 Indonesian 324 German 301 Brazilian 281 Pakistani 276 Kenyan 261 Japanese 257

What is the most necessary ability to work in the World Bank? 1. Personality (Briggs Myers test): Introverted over Extroverted Sensing over Intuition Thinking over Feeling Judging over Perceiving 2. PhD (about 20 universities; economists before not now); trend 3. Country of origin. Not quotas, but preferred countries.

Judging vs Perceiving characteristics Judging: Decisive, Controlled, Good at finishing, Organized, Structured, Scheduled, Quick at tasks, Responsible, Likes closure, and Makes plans Perceiving: Adaptable, Relaxed, Disorganized, Care- free, Spontaneous, Changes tracks midway, Keeps options open, Procrastinates, Dislikes routine, and Flexible

How do you get in? To succeed, the World Bank will take the commitment of the brightest, most talented people in the world. Dedicated women and men like you. Bank Internship Analyst (before Junior Professional Associates) Young Professional Program Consultants (STC, ETC) Fixed term staff Partnerships

Internships Academic requirements Fields (Fluency in English is required and knowledge of languages such as French, Spanish, Russian, Arabic, Portuguese, and Chinese are advantageous). The Bank pays an hourly salary to all Interns and, where applicable, provides an allowance towards travel expenses. Interns are responsible for their own living accommodations. Most positions are located in Washington, DC (some positions are offered in country offices) and are a minimum of four weeks in duration. Summer and Winter.

Junior Professional Associates now. Analyst Eligibility Criteria. The following are minimum requirements to be eligible for the Junior Professional Associate employment category : Be 28 years of age or younger Hold the equivalent of a Bachelor's degree (with some relevant experience), a Master's, or be a PhD candidate with a superior academic record. Be fluent in English. Be fully proficient in one or more of the Banks working languages: Arabic, Chinese, French, Portuguese, Russian, and Spanish is a plus The World Bank Group welcomes applicants from all over the globe regardless of gender, nationality, ethnic background, and disability. IT WAS A BEAUTY!!!! My experience WB (HR Washington DC) will be willing to have a session with you, if interested.

Young Professional For more than 50 years, the World Banks Young Professionals Program has been the preeminent program preparing global development leaders (about 1,700). If you have a passion for international development and a drive to lead, we want to hear from you. Minimum Requirements: Be 32 years of age or younger (i.e. born on or after June 1, 1983); PhD or Masters degree Be fluent in English, but note that full proficiency in one or more of the Banks working languages: Arabic, Chinese, French, Portuguese, Russian, and Spanish is desired but not required. Specialize in a field relevant to the World Banks operations such as economics, finance, education, public health, social sciences, engineering, urban planning, and natural resource management Have at least 3 years of relevant professional experience related to development or continued academic study at the doctoral level.

Consultants and Fixed-term STC ETC Fixed-term

WB Capital Flows IBRD lending is primarily financed by selling AAA-rated bonds in the world's financial markets. IBRD income also pays for World Bank operating expenses and profits contribute to IDA and debt relief, and humanitarian situations. The Bank has US$178 billion in what is known as "callable capital," which could be drawn from our shareholders as backing, should it ever be needed to meet IBRD obligations for borrowings (bonds) or guarantees. Has never been used. IDA the world's largest source of interest-free loans and grant assistance to the poorest countries, is replenished every three years by about 40 donor countries. IDA accounts for nearly 40 percent of lending.

What's the best part of working for the Bank? Can you share with us your personal experience? 1. Workplace that combine: (i) value quality of high academic standards; (ii) productivity of private sector; and (iii) benefits of European civil servants, but this is changing.. 2. Opportunity to meet people from all over the world. I have friends in USA, Australia, the Philippines, China, Mexico, Argentina, France, Spain, Eritrea, Zimbabwe, Korea, .. My last team included people from: Pakistan, Australia, Indonesia, Vietnam, Germany, France, Mongolia, China, Korea, Thailand, Laos, the Philippines, India, USA, Mexico, PNG, Senegal, Cambodia, Japan, Spain, England,

What's the best part of working for the Bank? Can you share with us your personal experience? 3. Opportunity to visit places (about 80 countries) and worked in about 30 (and traveled extensively in some like China (19 out of 30 Provinces; and Mexico (27 out of 31 states)). And to places where not many people go. 4. But most important is the couple of times I had when I made the difference (I was in the right place at the right time). But this is a topic for another session.

How the WB does business in China Follow Chinese protocol: (i) MoF, NDRC; (iii) Sectoral Ministries; or (iii) Provinces WB lends to MoF and MoF on-lends to Provinces and/or Counties Definitions: Amounts/Sectors (China) Design (China with TA from WB) Implementation (China (Ministries, Provinces, Counties) and WB accompany supervision for Fiduciaries (FM and procurement) and Safeguards

89 PROJECT CYCLE 1 Topic Identification Concept Review Project Concept Note (PCN) Purpose Agreement in principle with Borrower to start project preparation. Agree on Project Development Objectives, demonstrate linkages to higher-level CAS outcomes and provide framework for project preparation. Inform Bank management of proposed project concept, confirm resources needed for preparation, and initiate quality enhancement process.

91 Country Assistance Strategy, CAS The Country Assistance Strategy (CAS) establishes country-level outcomes to be achieved through Bank support, and indicates how specific projects would contribute toward achieving these outcomes. Projects identified in the CAS should be consistent with government-led development strategies such as: Poverty Reduction Strategy Paper (PRSP) for Low Income Countries (LICs); Transition Support Strategy (TSS) for Post-Conflict Countries; Other development strategy papers for Middle-Income Countries (MICs); and Government sector strategies/ programs if available.

92 Identification Identification indicates agreement between the Borrower and the Bank to start preparation of a project for possible Bank financing. In most cases, project identification arises from prior discussions between the Borrower and the Bank on alternative investment priorities, including such approaches as: Preparation of a sector strategy and prioritized investment plan by the Borrower. Joint economic and sector work by the Borrower and the Bank. Discussions of alternative investment choices in the context of previous Bank-financed projects.

93 Objectives: Identification During identification, the Bank Task Team completes the following tasks in cooperation with the Government: Confirm that the project is consistent with the agreed CAS and is a priority use of Bank resources. Reach preliminary agreement on the Project Development Objective. Obtain Bank budget for project preparation and develop a processing schedule Select the Task Team Agree on the institution(s) to be responsible for project preparation and/or implementation. Agree on preliminary work plan and sources of funding (if applicable) for project preparation. Consult with key stakeholders (including other Development Partners) as needed. Identify key issues and obstacles (risks) that may affect the likelihood for achieving the objectives of the project Decide on the type of investment lending instrument to be used.

94 Bank Processes: Identification For Projects Mentioned in the CAS: Sector Manager selects Task Team and designates Task Team Leader (TTL). Sector Department enters Activity Initiation Summary (AIS) in SAP to release budget for project preparation and establish key processing benchmarks to monitor preparation. Board notified through Monthly Operational Summary (MOS). For Projects not Mentioned in the CAS: CASs for Middle Income Countries generally agree on main areas of emphasis, but do not specify projects in advance. For Lower Income Countries, new priorities may arise since CAS was completed. Country Department approves project identification after seeking endorsement of Government counterpart to project concept. Remaining steps are the same as above.

95 Selection of Task Team Sector Manager or Task Team Leader (TTL) selects Task Team with skills needed to complete preparation. Task Teams generally include: TTLresponsible for managing work program and budget and ensuring quality (with SM approval). Sector specialistsas needed. Lawyer (when to bring him/her to a mission?) Procurement Specialist (when to bring to the field?) Financial Management Specialist (same question?) Safeguard Specialist (if applicable)(same question?) Finance Officer (previously Disbursement Officer) Other skills (e.g., M&E) as required by nature of project.

96 Country Ownership Strong country ownership is the single most important factor in determining whether or not development projects will succeed. In order to determine if a proposed project has strong country ownership, the Bank will often rely on: Prior Economic and Sector Work to identify issues affecting the achievement of expected outcomes and present options for addressing these constraints. Consultations with major stakeholders to see whether there is a broad consensus in the country for changes. Development communications activities to inform potential beneficiaries about the proposed project and obtain feedback.

97 Responsibilities: Identification Borrower: Establishes Project Development Objective (PDO), with advice and support from Bank Task Team. Assumes responsibility for project preparation. Bank Task Team: Shares global and technical knowledge with Borrower to improve development effectiveness of project design. Works with Borrower to ensure project is consistent with Bank operational policies and requirements. Development Partners (if applicable): Advise Borrower and Bank on related activities that may impact on achievement of PDO. May participate in preparation and financing of proposed project.

98 1.Results Chain. The causal sequence included in a project going from inputs to outputs through given processes, and then to medium and long-term outcomes 2.Country Level Objectives (Results or impact). Generally framed at the CAS level. It is the long-term outcome requiring multiple projects and/or other interventions to be achieved, and usually cannot be attributed specifically to a single project. 3.Performance. Degree to which a project operates according to specific standards or criteria including achievement of the expressed outcomes. 4.Project Development Objective (Outcomes). Medium-term effects or behavioral changes that can be directly attributed to a project. Represents the outcomes expected to be achieved by the end of the project. They contribute to the Country Level Objectives, but are often not sufficient in themselves to achieve them. 5.Outputs (products). Works, goods, services, organizational changes and other activities provided by the project activities. 6.Process (activities). Operational arrangements by which given inputs are combined to produce the desired project outputs 7.Inputs. Financial, human and material resources, as well a space, time and organization needed to produce the project outputs. Introducing the Results Chain

99 Funding for Project Preparation Borrowers may request Bank assistance to obtain funding for project preparation. Potential sources include: Borrower s own funds and/or Government budget. Proceeds of previous Bank loans (if available for this use). Project Preparation Facility (PPF). Requires approval by Country Director. Trust Funds. Generally administered directly by the Borrower, depending on the terms of the grant agreement. Funds provided by other development partners. PHRD from Japan (probably does not exist anymore)

100 Stakeholder Consultations The following agencies should be consulted as needed during project identification and preparation: Government counterpart agency--responsible for agreement with the Bank on CAS objectives and work program. Borrowerassumes financial obligation for repayment of Bank loan or credit. Guarantor (optional)may guarantee the financial repayment obligation of the Borrower. Implementing agenciesresponsible for project preparation and/or implementation. Direct beneficiariesshould be consulted as early as possible. Other stakeholderse.g., civil society, NGOs. Development Partnerse.g., potential cofinanciers.

101 Key Risks Before agreeing to proceed with the proposed project, the Bank should have a clear idea about the potential risks likely to be experienced, as well as possible mitigating measures. The type of potential risks to be assessed at identification include: Country and Sector-Level Risks: Macroeconomic framework; Country engagement; Country/sector governance and systemic corruption Operation Specific Risks: Sector policies and institutions Technical/design Implementing capacity and sustainability Financial management Procurement Social and environmental standards Other risks (like cost escalation, prevalence of failure in similar projects, adverse external development affecting costs/benefits of the project and risks specific to operations in conflict-affected areas) These risks and mitigating measures are captured in the Risk Assessment Template.

102 Risks categories 1 Country and Sector-Level Risks: Macroeconomic framework Is there a likelihood of serious macroeconomic or financial instability due to external or internal factors? Country engagement Is there broad political commitment to policies and programs agreed with the Bank? Are special interest groups able to block key agreements? Country/sector governance and systemic corruption Are policies and programs developed with adequate transparency and involvement of key stakeholders?

103 Risks categories 2 Operation Specific Risks: Sector policies and institutions Are country institutions able to formulate and implement sound sector policies and mitigate risks? Technical/design Is the project innovative, or does it relay on well-tested technology or approaches? Implementing capacity and sustainability Does the implementing agency have the technical and institutional capacity to implement and operate the proposed project? Financial management Is there a sound financial management system in place, including audits?

104 Risks categories 3 Operation Specific Risks: Procurement Does the implementing agency have the capacity and commitment to conduct procurement in a fair and transparent fashion? Social and environmental standards Are the any significant social and/or environmental safeguard issues? Other risks Is there a track record of successful implementation or a prevalence of failure in similar projects? Are there issues with possible cost escalation and/or adverse external development affecting costs/benefits of the project? Are there risks specific to operations in conflict-affected areas?

105 Risks rating system High (H) Serious developmental or reputational risk that cannot be fully mitigated Substantial (S) Important developmental or reputational risk that can be partially or wholly mitigated Moderate (M) Moderate developmental or reputational risk that can be largely mitigated Low (L) Negligible developmental or reputational risk

106 Review of Key Concepts CAS identifies Country Level Objectives to be achieved. Government and Bank agree on areas of emphasis for Bank program, and possibly (especially for Lower Income Countries) a list of projects for the CAS period. Projects should be strongly owned by the Government, generally based on a longer period of engagement with the Bank. The Results Chain is used to demonstrate how project outcomes help to achieve Country level objectives. Identification represents an agreement between the Government and the Bank to proceed with project preparation.

107 Logical (Results) Framework Design Execution Supervision Impact Evaluation Implementation Completion Reports

108 Project: Improve the Quality of Education of all the Basic Level Public Schools in the State of Guanajuato, Mexico Outcome (Project Objective) The Intermediate Why: Improve the learning outcomes in math, language and sciences against a baseline Products (Components) The What: Component A: Increase the access, retention and completion rates of students in the basic level of public schools in Guanajuato Component B: Improve the pedagogical classroom transactions Component C: Improve school management and leadership Activities (Processes) The How: A: School construction and rehabilitation; hiring of qualified teachers; dissemination campaigns B: Relevant pre and in- service teacher training of appropriate quality; provision of textbooks and other learning inputs; learning assessment measuring systems C: Leadership programs; team building, MIS Inputs The With What: Money, trainers, curricula, know how Higher Order Outcomes (Impact) The Greater Why: Ensure a skilled labor force contirbuting to increment the productivity, and therefore, the economic growth of the State of Guanajuato

Using a Results Chain What are the intended results of the program? How will we achieve the intended results? How will we know we have achieved the intended results? A Results Chain answers 3 questions:

The Results Chain in a Typical Program o Budget o Staffing o Training o Studies o Construction o Training plan completed o Cash transfer delivered o School built o New practices adopted o School attendance up o Poverty reduced o Income inequality reduced o Labor productivity increased Results-based management ImplementationResults Financial, human, and other resources mobilized to support activities. Actions taken or work performed to convert inputs into specific outputs. Project deliverables within the control of implementing agency SUPPLY SIDE. Use of outputs by beneficiaries and stakeholders outside the control of implementing agency DEMAND SIDE. Changes in outcomes that have multiple drivers. INPUTSACTIVITIESOUTPUTSOUTCOMES LONGER-TERM OUTCOMES HIGHER ORDER GOALS

Example 1: Results Chain ActivitiesOutputsOutcomes Longer-term Outcomes Education o Teacher training o Textbooks developed o Teachers trained in new methods o Textbooks delivered o New methods used o Increased completion rates o Increased test scores o Increased labor productivity Social Protection and Labor o CCTs delivered o Targeting system o MIS o CCTs delivered to target households in accordance with conditions o Increased food consumption o Increased child health visits o Decreased poverty o Lower child mortality

112 AN OBJECTIVE (OR INTERMEDIATE RESULTS) Is the specific outcome attributed to the effects of the investment (project) Expresses and describes the intended change It is measurable and observable

And finally. A couple of comments regarding new lending instruments..

Results-based Financing Financing arrangements that encourage/reward achievement of results: Output-based Financing Financing for Product / Service /Activity Produced Performance-based Financing Financing contingent on meeting agreed performance milestones

OUTPUT-BASED FINANCING How it works: Disbursements made against pre-defined costs for producing an activity or an "output (i.e., one trained youngster) Pre-defined unit costs are determined a priori, based on a detailed analysis of the costs of various inputs needed to produce an output Unit costs are adjusted periodically Advantages: Provides a strong linkage between "outputs" and disbursements Facilitates disbursements by reducing the transactions costs; can exclude from the pre-defined cost those items that would require more complex procurement, etc. Monitoring and evaluation systems should integrate financial and project results systems Systems and effective standards of administration and follow both financial as hiring Disadvantages: Requires preparation of detailed cost studies up-front, during preparation Doesnt ensure the achievement of outcomes, but of outputs.still a stronger link than disbursement against inputs

Performance-based Financing How it works: Financial instruments or mechanisms within a financial instrument that link the funding or disbursements to completion of tasks or accomplishment of milestones or achievement of specified outputs or intermediate outcomes Financial Instruments DPL (matrix of conditionalities) APL (programmatic loan with pre-defined triggers to move ahead with subsequent phases of the program) Traditional (disbursement pari passu with purchases of inputs) Mechanisms within one instrument: Milestones, performance triggers permit disbursements only after actions taken, activities completed, results achieved, etc. Conditions for disbursement Conditions that withhold either initial disbursements or disbursements beyond a pre-established amount until actions taken, etc. Disbursement percentage - an increase or decrease in percentage upon taking action, complying with pre-established condition Date-based incentives e.g., increase (or decrease) in disbursement percentage if an action is taken by a certain date, etc.

Examples of Projects / Programs that Apply Performance-based Disbursements National government CCT program that disburses against the value of transfers and technical assistance for the program Incorporates incentives and / or awards for performance, linking the value and pace (pari-passu) of Bank disbursements to progress in carrying out technical assistance and implementing agreed measures Advantages: Allows for immediate financial support, even if and when the overall program is judged to need strengthening before being scaled up Establishes linkages between program implementation and its technical improvements Creates incentives for the implementing agency and the Borrower, and in this case the Ministry of Finance, to support the timely implementation of technical assistance and program improvements BR-Family Health, BR-Qualisus and others incorporate performance- based mechanisms for disbursement of federal funds to sub-national into the design of the program, strengthening financial and operational monitoring systems, results monitoring. By definition, Bank disbursements have a link to performance although not specifically in the Banks disbursement mechanisms

Examples of Projects / Programs that Apply Output-based Disbursements AR Rural Education; NI Education; Indonesia Bos-Kita National programs that finance part of the program expenditures at the provincial level or at the school level Ministries transfer amounts that have been pre-defined on the basis of cost of each activity funded (number of certified students, enrollment of students, etc.) Annual agreements between the respective Ministries and each province or school that specify the expected results, pre- determined unit costs for each service, the work program and assigned budget The amounts transferred to the province or school are considered the eligible expenditure" for purposes of Bank disbursements The pre-defined unit cost of each activity is reviewed and adjusted periodically Advantage: facilitates Bank disbursements while utilizing financial and implementation information systems to monitor progress towards accomplishment of project/program objectives

Examples of Projects / Programs that Apply Output-based Disbursements AR LLL Activities are financed through payments made by the Ministry of labor to Implementing Entities (public or private) on the basis of the quantity of products delivered and a standard unit cost. Output based activities finance the registration of occupational norms, the certification of evaluators, curricula development and publication, and adult education activities. The unit cost of the output based activities (occupational norm, curricular alignment activity, and adult education activity) was determined through analysis of the actual costs of its components. And these do not follow procurement rules Project supports: (i) registration of about 300 labor norms, (ii) certification of about 800 evaluators, (iii) development of about 300 curricula, (iv) certification in primary and secondary education of about 100,000 adults

the world bank and human capital development the case for supporting education eduardo velez...

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