World Bank Borrower Relations and Project Supervision
This paper explores the relevance of the principal-agent model for analyzing development projects using data from World Bank-funded projects. After demonstrating that World Bank loan agreements can be viewed as principal-agent contracts, the paper explores the importance of the agency problem in determining project performance. Predictions from an adversarial model contrast with those of a cooperative model. The importance of information in the adversarial model links World Bank supervision to project performance. Data support the relevance of the agency problem and the role of supervision as monitoring. The paper concludes with suggestions for modifying project selection and implementation to reduce agency problems.
|Date of creation:||Mar 1995|
|Date of revision:|
|Publication status:||Published in Canadian Journal of Development Studies, March 2001, 22(1):191-218.|
|Contact details of provider:|| Postal: Maildrop 708, 124 Raymond Avenue, Poughkeepsie NY 12604-0708|
Web page: http://irving.vassar.edu/VCEWP/VCEWP.htm
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- de Bijl, P.W.J., 1994. "Delegation of responsibility in organizations," Discussion Paper 1994-69, Tilburg University, Center for Economic Research.
- Burnside, Craig & Dollar, David, 1997.
"Aid, policies, and growth,"
Policy Research Working Paper Series
1777, The World Bank.
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