The risk of resource misappropriation in community-driven development

Community-driven development (CDD) is being currently proposed as the main avenue to fighting poverty and circumventing the shortcomings of state-directed aid resources. One of the main difficulties in CDD programs lies in their vulnerability to capture by local elites. The paper discusses the possibility of mitigating this problem through a so-called leader-disciplining mechanism (LDM) that relies on a sequential disbursement procedure supported by a fraud detection mechanism. On the basis of the LDM framework, it is argued in particular that too quick and massive a rush on CDD may prove self-defeating in the sense that the share of aid resources actually reaching the poor will be low if donor agencies are impatient to achieve results. (C) 2003 Elsevier Ltd. All rights reserved.