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A Test of Hirschman’s Hiding Hand Principle in World Bank-Financed Hydropower Projects

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  • Olasehinde-Williams, Godwin
  • Jenkins, Glenn P.

Abstract

This study is an attempt to determine whether the need to get hydropower project appraisals perfectly right during the pre-construction phase, so as to prevent significant overruns along with benefit shortfalls, should supersede the need to deliver projects at the earliest possible time so as to meet the needs of the people. To achieve the study objective, we test whether the Hiding Hand principle is predominantly benevolent or malevolent. We argue that if the Hiding Hand is benevolent, then project stakeholders are better off focusing on the quick delivery of power projects; however, if it is malevolent, then more attention should be given to perfecting project appraisals. It transpires from the statistical analysis that the Benevolent Hiding Hand dominates the Malevolent Hiding Hand in the selected World Bank-financed hydropower projects (33% v. 21%), and that ultimately, 75% of the projects were even more successful than anticipated—while 25% of the projects failed. Our findings further show that while a total loss of 2.335 billion USD in the sampled dams was caused by the Malevolent Hiding Hand, 11.259 billion USD was gained as a result of the Benevolent Hiding Hand. The predominance of the Benevolent Hiding Hand justifies placing some weight on proceeding with hydropower projects that show significant promise even if all the implantation risks are not fully quantified at the appraisal stage, especially in developing countries.

Suggested Citation

  • Olasehinde-Williams, Godwin & Jenkins, Glenn P., 2023. "A Test of Hirschman’s Hiding Hand Principle in World Bank-Financed Hydropower Projects," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 14(2), pages 298-317, July.
    • Handle: RePEc:cup:jbcoan:v:14:y:2023:i:2:p:298-317_6
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    References listed on IDEAS

    as
    1. Awojobi, Omotola & Jenkins, Glenn P., 2015. "Were the hydro dams financed by the World Bank from 1976 to 2005 worthwhile?," Energy Policy, Elsevier, vol. 86(C), pages 222-232.
    2. Flyvbjerg, Bent, 2016. "The Fallacy of Beneficial Ignorance: A Test of Hirschman’s Hiding Hand," World Development, Elsevier, vol. 84(C), pages 176-189.
    3. Kablan P. Kacou & Lavagnon A. Ika & Lauchlan T. Munro, 2022. "Fifty years of capacity building: Taking stock and moving research forward," Public Administration & Development, Blackwell Publishing, vol. 42(4), pages 215-232, October.
    4. Jeremy Adelman, 2013. "Worldly Philosopher: The Odyssey of Albert O. Hirschman," Economics Books, Princeton University Press, edition 1, number 9935.
    5. Ika, Lavagnon A., 2018. "Beneficial or Detrimental Ignorance: The Straw Man Fallacy of Flyvbjerg’s Test of Hirschman’s Hiding Hand," World Development, Elsevier, vol. 103(C), pages 369-382.
    6. Saule Baurzhan & Glenn P. Jenkins & Godwin O. Olasehinde-Williams, 2021. "The Economic Performance of Hydropower Dams Supported by the World Bank Group, 1975–2015," Energies, MDPI, vol. 14(9), pages 1-22, May.
    7. Bacon, Robert W & Besant-Jones, John E, 1998. "Estimating construction costs and schedules: Experience with power generation projects in developing countries," Energy Policy, Elsevier, vol. 26(4), pages 317-333, March.
    8. Saule Baurzhan & Glenn Jenkins & Godwin O. Olasehinde-Williams, 2021. "The Economic Performance of Hydropower Dams Supported by the World Bank Group, 1975–2015," Working Paper 1463, Economics Department, Queen's University.
    9. Lavagnon Ika & Simon Feeny, 2022. "Optimism Bias and World Bank Project Performance," Journal of Development Studies, Taylor & Francis Journals, vol. 58(12), pages 2604-2623, December.
    10. Glenn Jenkins & RICHARD ZUKER, 1984. "Blue Gold: Hydro-Electric Rent In Canada," Development Discussion Papers 1984-01, JDI Executive Programs.
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    More about this item

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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