A Puzzle with Missing Pieces : Explaining the Effectiveness of World Bank Development Projects

The identification of key determinants of aid effectiveness is a long-standingquestion in the development community. This paper reviews the literature on aid effectiveness at the project level andthen extends the inquiry in a variety of dimensions with new data on World Bank investment project financing. It confirmsthat the country institutional setting and quality of project supervision are associated with project success, asidentified previously. However, many aspects of the development project cycle, especially project design, havebeen difficult to measure and therefore under-investigated. The paper finds that project design, as proxied by theestimated value added of design staff, the presence of prior analytic work, and other specially collected measures, is asignificant predictor of ultimate project success. These factors generally grow in predictive importance as theincome level of the country rises. The results also indicate that a key determinant of the staff’s contribution is theirexperience with previous World Bank projects, but not other characteristics such as age, education, or country location.Key inputs to the project production process associated with subsequent performance are not captured in routine datasystems, although it is feasible to do so. Further, the conceptualization and measurement of the success ofproject-based aid should be revisited by evaluative bodies to reflect a project’s theorized contribution to development outcomes.