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Is It the Journey That Matters ? A Fresh Look at the Impact of World Bank Policy Lending

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  • Moll,Peter G.
  • Smets,Lodewijk

Abstract

This paper investigates the impact of World Bank development policy operations on the quality of economic policy during the period 1998-2015. A new theoretical framework distinguishes among three effects that have been conflated hitherto: (a) marginal impacts of additional policy actions within the current year; (b) length of the policy engagement with client countries, and (c) changes over time in the marginal impact of policy actions. The analysis focuses on policy actions that are particularly relevant for the quality of economic management. Consistent with past research, robust panel estimations indicate that development policy financing has a positive effect on the quality of government economic policy. The econometric work suggests that the nature of the policy dialogue and quality of the engagement with government matter more than the sheer number of policy actions adopted. There is also tentative evidence that although the positive impact is sustained over time, the initial years of an engagement are the most productive for improvement in government economic policy. This may be linked to the fact that over time the reform program changes from'first-generation'to more complex'second-generation'policy actions.

Suggested Citation

  • Moll,Peter G. & Smets,Lodewijk, 2018. "Is It the Journey That Matters ? A Fresh Look at the Impact of World Bank Policy Lending," Policy Research Working Paper Series 8645, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8645
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    Cited by:

    1. Krishna Chaitanya Vadlamannati & Samuel Brazys, 2023. "Does cultural diversity hinder the implementation of IMF-supported programs? An empirical investigation," The Review of International Organizations, Springer, vol. 18(1), pages 87-116, January.
    2. Ablam Estel Apeti & Kwamivi Mawuli Gomado, 2025. "International monetary fund conditionality and structural reforms: Evidence from developing countries," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 33(2), pages 439-486, April.
    3. Knack,Stephen & Parks,Bradley Christopher & Harutyunyan,Ani & DiLorenzo,Matthew, 2020. "How Does the World Bank Influence the Development Policy Priorities of Low-Income and Lower-Middle Income Countries ?," Policy Research Working Paper Series 9225, The World Bank.
    4. Lodewijk Smets & Richard James Lowden Record, 2022. "The Pandemic’s Extensive Reform Agenda," World Bank Publications - Reports 37088, The World Bank Group.

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