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Corporate Governance at the World Bank and the Dilemma of Global Governance

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  • Ashwin Kaja
  • Eric Werker

Abstract

Most major decisions at the World Bank are made by its Board of Executive Directors. While some countries enjoy the opportunity to serve on this powerful body, most countries rarely, if ever, get that chance. This gives rise to the question: Does board membership lead to higher funding from the World Bank's two main development financing institutions, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). Empirical analysis shows that developing countries serving on the board can expect more than double the funding from the IBRD as countries not on the board. In absolute terms, countries on the board receive an average $60 million "bonus" in IBRD loans, an amount that rises in years when IBRD loans are in high demand, particularly for countries in the most influential seats. This effect is more likely driven by informal rules and norms in the boardroom than by the power of the vote itself. No significant effect is found in IDA funding. These results point to challenges of global governance through representative institutions. Copyright The Author 2010. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Ashwin Kaja & Eric Werker, 2010. "Corporate Governance at the World Bank and the Dilemma of Global Governance," World Bank Economic Review, World Bank Group, vol. 24(2), pages 171-198, June.
  • Handle: RePEc:oup:wbecrv:v:24:y:2010:i:2:p:171-198
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    File URL: http://hdl.handle.net/10.1093/wber/lhq006
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    Cited by:

    1. Dreher, Axel & Voigt, Stefan, 2011. "Does membership in international organizations increase governments' credibility? Testing the effects of delegating powers," Journal of Comparative Economics, Elsevier, vol. 39(3), pages 326-348, September.
    2. repec:eee:reecon:v:72:y:2018:i:2:p:263-276 is not listed on IDEAS
    3. 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.
    4. Dreher, Axel & Richert, Katharina, 2017. "The Political Economy of International Finance Corporation Lending," CEPR Discussion Papers 12290, C.E.P.R. Discussion Papers.
    5. James Vreeland, 2011. "Foreign aid and global governance: Buying Bretton Woods – the Swiss-bloc case," The Review of International Organizations, Springer, vol. 6(3), pages 369-391, September.
    6. Dreher, Axel & Mikosch, Heiner & Voigt, Stefan, 2015. "Membership has its Privileges – The Effect of Membership in International Organizations on FDI," World Development, Elsevier, vol. 66(C), pages 346-358.
    7. Kilby, Christopher, 2013. "The political economy of project preparation: An empirical analysis of World Bank projects," Journal of Development Economics, Elsevier, vol. 105(C), pages 211-225.
    8. Kearney, Colm, 2012. "Emerging markets research: Trends, issues and future directions," Emerging Markets Review, Elsevier, vol. 13(2), pages 159-183.
    9. Axel Dreher & Katharina Michaelowa, 2008. "The political economy of international organizations," The Review of International Organizations, Springer, vol. 3(4), pages 331-334, December.
    10. John W. McArthur & Eric Werker, 2016. "Developing countries and international organizations: Introduction to the special issue," The Review of International Organizations, Springer, vol. 11(2), pages 155-169, June.
    11. Randall Stone, 2013. "Informal governance in international organizations: Introduction to the special issue," The Review of International Organizations, Springer, vol. 8(2), pages 121-136, June.
    12. Kilby, Christopher, 2015. "Assessing the impact of World Bank preparation on project outcomes," Journal of Development Economics, Elsevier, vol. 115(C), pages 111-123.
    13. Marchesi, Silvia, 2018. "Communication and performance in Bank–Fund joint participation," Research in Economics, Elsevier, vol. 72(2), pages 263-276.
    14. Vikram Nehru, 2014. "The World Bank and the Asian Development Bank: should Asia have both?," Chapters,in: New Global Economic Architecture, chapter 9, pages 197-214 Edward Elgar Publishing.
    15. Patrick Bayer & Christopher Marcoux & Johannes Urpelainen, 2014. "Choosing international organizations: When do states and the World Bank collaborate on environmental projects?," The Review of International Organizations, Springer, vol. 9(4), pages 413-440, December.

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