The costs of favoritism: Is politically-driven aid less effective?

Axel Dreher, Stephan Klasen, James Vreeland and Eric Werker
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Eric Werker: Harvard Business School

No 26, Courant Research Centre: Poverty, Equity and Growth - Discussion Papers from Courant Research Centre PEG

Abstract: 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.

Keywords: World Bank; Aid Effectiveness; Political Influence; United Nations Security Council (search for similar items in EconPapers)
JEL-codes: F35 O11 O19 (search for similar items in EconPapers)
Date: 2010-03-11
New Economics Papers: this item is included in nep-pol and nep-ppm
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Related works:
Working Paper: The Costs of Favoritism: Is Politically-driven Aid less Effective? (2010)
Working Paper: The Costs of Favoritism: Is Politically-Driven Aid Less Effective? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:got:gotcrc:026

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