There is an emerging consensus thatcapacity building in developing countries must shift fromsupply-side, donor-driven to demand-led approaches. Threeareas in which this is critical are evaluation capacity, theavailability of skilled individuals, and aid management. Aneffective demand-led approach requires fostering atransparent evaluation culture, focused on poverty impactsand involving participatory approaches. The approach toskilled resources must move from skills acquisition to theretention and use of skills, using the resources of thediaspora, tackling incentives and addressing issues thatdiscourage retention of skills.