Advanced Search
MyIDEAS: Login to save this paper or follow this series

The costs of favoritism: Is politically-driven aid less effective?

Contents:

Author Info

  • Axel Dreher

    (Georg-August University Göttingen)

  • Stephan Klasen

    (Georg-August University Göttingen)

  • James Raymond Vreeland

    (Georgetown University)

  • Eric Werker

    (Harvard Business School)

Abstract

As is now well documented, aid is given for both political as well as economic reasons. The conventional wisdom is that politically-motivated aid is less effective in promoting developmental objectives. We examine the ex-post performance ratings of World Bank projects and generally find that projects that are potentially politically motivated – such as those granted to governments holding a non-permanent seat on the United Nations Security Council or an Executive Directorship at the World Bank – are no more likely, on average, to get a negative quality rating than other projects. When aid is given to Security Council members with higher short-term debt, however, a negative quality rating is more likely. So we find evidence that World Bank project quality suffers as a consequence of political influence only when the recipient country is economically vulnerable in the first place.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www2.vwl.wiso.uni-goettingen.de/courant-papers/CRC-PEG_DP_26.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Courant Research Centre PEG in its series Courant Research Centre: Poverty, Equity and Growth - Discussion Papers with number 26.

as in new window
Length:
Date of creation: 11 Mar 2010
Date of revision:
Handle: RePEc:got:gotcrc:026

Contact details of provider:
Postal: Platz der Goettinger Sieben 3; D-37073 Goettingen, GERMANY
Phone: +49 551 39 14066
Fax: + 49 551 39 14059
Web page: http://www.uni-goettingen.de/en/82144.html

Related research

Keywords: World Bank; Aid Effectiveness; Political Influence; United Nations Security Council;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Berthelemy, Jean-Claude & Tichit, Ariane, 2002. "Bilateral Donors' Aid Allocation Decisions: A Three-dimensional Panel Analysis," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  2. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, Elsevier, vol. 64(2), pages 547-570, April.
  3. Dollar, David & Svensson, Jakob, 1998. "What explains the success or failure of structural adjustment programs?," Policy Research Working Paper Series 1938, The World Bank.
  4. Kilby, Christopher, 2009. "The political economy of conditionality: An empirical analysis of World Bank loan disbursements," Journal of Development Economics, Elsevier, Elsevier, vol. 89(1), pages 51-61, May.
  5. Axel Dreher & Jan-Egbert Sturm & James Raymond Vreeland, 2007. "Development Aid and International Politics: Does membership on the UN Security Council influence World Bank decisions?," KOF Working papers, KOF Swiss Economic Institute, ETH Zurich 07-171, KOF Swiss Economic Institute, ETH Zurich.
  6. Hristos Doucouliagos & Martin Paldam, 2005. "The Aid Effectiveness Literature. The Sad Result of 40 Years of Research," Economics Working Papers, School of Economics and Management, University of Aarhus 2005-15, School of Economics and Management, University of Aarhus.
  7. Kilby, Christopher, 2000. "Supervision and performance: the case of World Bank projects," Journal of Development Economics, Elsevier, Elsevier, vol. 62(1), pages 233-259, June.
  8. Kaufmann, Daniel & Wang, Yan, 1995. "Macroeconomic policies and project performance in the social sectors: A model of human capital production and evidence from LDCs," World Development, Elsevier, Elsevier, vol. 23(5), pages 751-765, May.
  9. Sanjay Reddy & Camelia Minoiu, 2009. "Development Aid and Economic Growth," IMF Working Papers, International Monetary Fund 09/118, International Monetary Fund.
  10. Ilyana Kuziemko & Eric Werker, 2006. "How Much Is a Seat on the Security Council Worth? Foreign Aid and Bribery at the United Nations," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 114(5), pages 905-930, October.
  11. Fleck, Robert K. & Kilby, Christopher & Fleck, Robert K., 2001. "World Bank Independence: A Model and Statistical Analysis of U.S. Influence," Vassar College Department of Economics Working Paper Series, Vassar College Department of Economics 53, Vassar College Department of Economics.
  12. Raghuram G. Rajan, 2005. "Aid and Growth: What Does The Cross-Country Evidence Really Show?," Working Papers id:54, eSocialSciences.
  13. Thomas Barnebeck Andersen & Henrik Hansen & Thomas Markussen, 2004. "US Politics and World Bank IDA-Lending," Discussion Papers, University of Copenhagen. Department of Economics 05-06, University of Copenhagen. Department of Economics, revised May 2005.
  14. Alberto Alesina & David Dollar, 1998. "Who Gives Foreign Aid to Whom and Why?," NBER Working Papers 6612, National Bureau of Economic Research, Inc.
  15. Ashwin Kaja & Eric D. Werker, 2009. "Corporate Misgovernance at the World Bank," Harvard Business School Working Papers, Harvard Business School 09-108, Harvard Business School.
  16. Gustavo Canavire & Peter Nunnenkamp & Rainer Thiele & Luis Triveño, 2005. "Assessing the Allocation of Aid: Developmental Concerns and the Self-Interest of Donors," Kiel Working Papers 1253, Kiel Institute for the World Economy.
  17. Christopher Kilby & Axel Dreher, 2009. "The Impact of Aid on Growth Revisited: Do Donor Motives Matter?," Ibero America Institute for Econ. Research (IAI) Discussion Papers, Ibero-America Institute for Economic Research 191, Ibero-America Institute for Economic Research.
  18. Frey, Bruno S. & Schneider, Friedrich, 1986. "Competing models of international lending activity," Journal of Development Economics, Elsevier, Elsevier, vol. 20(2), pages 225-245, March.
  19. Beck, T.H.L. & Clarke, G. & Groff, A. & Keefer , P. & Walsh, P., 2001. "New tools in comparative political economy: The database of political institutions," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-3125517, Tilburg University.
  20. World Bank, 2008. "World Development Indicators 2008," World Bank Publications, The World Bank, number 11855, August.
  21. Jonathan Isham & Daniel Kaufmann, 1999. "The Forgotten Rationale For Policy Reform: The Productivity Of Investment Projects," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 114(1), pages 149-184, February.
  22. Dunning, Thad, 2004. "Conditioning the Effects of Aid: Cold War Politics, Donor Credibility, and Democracy in Africa," International Organization, Cambridge University Press, Cambridge University Press, vol. 58(02), pages 409-423, April.
  23. Minoiu, Camelia & Reddy, Sanjay G., 2010. "Development aid and economic growth: A positive long-run relation," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 50(1), pages 27-39, February.
  24. Kilby, C., 1994. "World Bank-borrower relations and project supervision," Discussion Paper, Tilburg University, Center for Economic Research 1994-14, Tilburg University, Center for Economic Research.
  25. Dreher, Axel & Sturm, Jan-Egbert & Vreeland, James Raymond, 2009. "Global horse trading: IMF loans for votes in the United Nations Security Council," European Economic Review, Elsevier, Elsevier, vol. 53(7), pages 742-757, October.
  26. Broz, J. Lawrence, 2002. "Political System Transparency and Monetary Commitment Regimes," International Organization, Cambridge University Press, Cambridge University Press, vol. 56(04), pages 861-887, September.
  27. Derek Headey, 2008. "Geopolitics and the effect of foreign aid on economic growth: 1970-2001," Journal of International Development, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 20(2), pages 161-180.
  28. Easterly, W & Levine, R, 1996. "Africa's Growth Tragedy : Policies and Ethnic Divisions," Papers, Harvard - Institute for International Development 536, Harvard - Institute for International Development.
  29. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, Elsevier, vol. 80(1), pages 123-129, July.
  30. Voeten, Erik, 2005. "The Political Origins of the UN Security Council's Ability to Legitimize the Use of Force," International Organization, Cambridge University Press, Cambridge University Press, vol. 59(03), pages 527-557, July.
  31. Boone, Peter, 1996. "Politics and the effectiveness of foreign aid," European Economic Review, Elsevier, Elsevier, vol. 40(2), pages 289-329, February.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Christopher Kilby, 2011. "The Political Economy of Project Preparation: An Empirical Analysis of World Bank Projects," Villanova School of Business Department of Economics and Statistics Working Paper Series, Villanova School of Business Department of Economics and Statistics 14, Villanova School of Business Department of Economics and Statistics.
  2. Kraay, Aart & Kraay, Aart & Murrell, Peter, 2013. "Misunderestimating corruption," Policy Research Working Paper Series 6488, The World Bank.
  3. Denizer, Cevdet & Kaufmann, Daniel & Kraay, Aart, 2013. "Good countries or good projects? Macro and micro correlates of World Bank project performance," Journal of Development Economics, Elsevier, Elsevier, vol. 105(C), pages 288-302.
  4. Ugo Panizza, 2013. "Financial Development and Economic Growth: Known Knowns, Known Unknowns, and Unknown Unknowns," IHEID Working Papers, Economics Section, The Graduate Institute of International Studies 14-2013, Economics Section, The Graduate Institute of International Studies.
  5. Sivlai Marchesi & Emanuela Sirtori, 2010. "Is two better than one? Effects on growth of Bank-Fund interaction," Working Papers, University of Milano-Bicocca, Department of Economics 189, University of Milano-Bicocca, Department of Economics, revised Jun 2010.
  6. James Vreeland, 2011. "Foreign aid and global governance: Buying Bretton Woods – the Swiss-bloc case," The Review of International Organizations, Springer, Springer, vol. 6(3), pages 369-391, September.
  7. Humphrey, Chris & Michaelowa, Katharina, 2013. "Shopping for Development: Multilateral Lending, Shareholder Composition and Borrower Preferences," World Development, Elsevier, Elsevier, vol. 44(C), pages 142-155.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:got:gotcrc:026. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dominik Noe).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.