Should Aid Reward Performance? Evidence from a Field Experiment on

We report an experiment in 3,000 villages that tested whether incen-tives improve aid efficacy. Villages received block grants for maternal and child health and education that incorporated relative performance incentives. Subdistricts were randomized into incentives, an otherwise identical program without incentives, or control. Incentives initially improved preventative health indicators, particularly in underdevel-oped areas, and spending efficiency increased. While school enrollments improved overall, incentives had no differential impact on education, and incentive health effects diminished over time. Reductions in neo-natal mortality in nonincentivized areas did not persist with incentives. We find no systematic scoring manipulation nor funding reallocation toward richer areas. (JEL F35, I18, I28, J13, J16, O15) A recent movement throughout the world has sought to improve the links between development aid and performance. For example, the United Nations has sought to focus developing country governments on improving human development and poverty alleviation by defining and measuring progress against the Millenniu