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As the World Bank Turns: Determinants of IDA Lending in the Cold War and After

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  • Morrison Kevin M

    (Cornell University)

Abstract

How does the internal organization of a foreign aid donor affect its aid allocation decisions? Despite the voluminous literature on the political economy of foreign aid, little systematic scholarship exists on this topic. This paper analyzes the allocations of the International Development Association (IDA), the World Bank's lending arm for the poorest countries, to all eligible countries between 1977 and 2005. While factors such as a country's need and its policy environment have consistently impacted IDA's allocation decisions, other factors have changed in important ways. For example, IDA disbursements do not follow US aid disbursements in the post-Cold War period the way they did during the Cold War. And most strikingly, IDA's allocations have become tightly linked to debt owed to IDA's sister organization, the International Bank for Reconstruction and Development (IBRD). While IDA used to shy away from countries with higher debt to the IBRD, the last two decades have seen IDA engage in apparently defensive lending for the IBRD, lending more to countries with outstanding balances to that institution. The results suggest greater focus on the internal structures of donors would yield insight into their allocation decisions.

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  • Morrison Kevin M, 2011. "As the World Bank Turns: Determinants of IDA Lending in the Cold War and After," Business and Politics, De Gruyter, vol. 13(2), pages 1-29, August.
    • Handle: RePEc:bpj:buspol:v:13:y:2011:i:2:n:2
    DOI: 10.2202/1469-3569.1365
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    2. Krishna Chaitanya Vadlamannati & Yuanxin Li & Samuel Brazys & Alexander Dukalskis, 2019. "Building Bridges or Breaking Bonds? The Belt and Road Initiative and Foreign Aid Competition," Working Papers 201906, Geary Institute, University College Dublin.
    3. Erasmus Kersting & Christopher Kilby, 2019. "The rise of supplemental lending at the World Bank," Canadian Journal of Economics, Canadian Economics Association, vol. 52(4), pages 1655-1698, November.
    4. Kevin Morrison, 2013. "Membership no longer has its privileges: The declining informal influence of Board members on IDA lending," The Review of International Organizations, Springer, vol. 8(2), pages 291-312, June.
    5. Judith CLIFTON & Daniel DÍAZ-FUENTES & JULIO REVUELTA, 2013. "Explaining Infrastructure Investment Decisions at the European Investment Bank 1958-2004," Departmental Working Papers 2013-06, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    6. Strand, Jonathan R. & Zappile, Tina M., 2015. "Always Vote for Principle, Though You May Vote Alone: Explaining United States Political Support for Multilateral Development Loans," World Development, Elsevier, vol. 72(C), pages 224-239.

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