The Costs of Favoritism: Is Politically-Driven Aid Less Effective?
University of Heidelberg
University of Goettingen (Gottingen) - Faculty of Economics and Business Administration; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)
James Raymond Vreeland
Georgetown University - Edmund A. Walsh School of Foreign Service (SFS); Georgetown University - Department of Government
Harvard Business School
March 19, 2010
As is now well documented, aid is given for both political as well as economic reasons. The conventional wisdom is that politically-motivated aid is less effective in promoting developmental objectives. We examine the ex-post performance ratings of World Bank projects and generally find that projects that are potentially politically motivated – such as those granted to governments holding a non-permanent seat on the United Nations Security Council or an Executive Directorship at the World Bank – are no more likely, on average, to get a negative quality rating than other projects. When aid is given to Security Council members with higher short-term debt, however, a negative quality rating is more likely. So we find evidence that World Bank project quality suffers as a consequence of political influence only when the recipient country is economically vulnerable in the first place.
Number of Pages in PDF File: 49
Keywords: World Bank, Aid Effectiveness, Political Influence, United Nations Security Council
JEL Classification: O19, O11, F35working papers series
Date posted: March 25, 2010
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