Governance Indicators in the Law of Development Finance: A Legal Analysis of the World Bank’s ‘Country Policy and Institutional Assessment’

Abstract

The article presents a legal critique of and a legal framework for the ‘Country Policy and Institutional Assessment’ (CPIA), the indicator system used by the World Bank to evaluate the governance performance of its borrowers and to allocate aid to its poorest members. The CPIA is becoming increasingly rules-based and raises important questions for legal research: First, what legal role does the CPIA play in the allocation of public resources by the World Bank, and how can the CPIA’s financial, reputational, and cognitive effects be conceptualized from a legal point of view? Secondly, what is the existing legal framework for influential governance rating exercises like the CPIA, and should this framework be developed further along the lines of Global Administrative Law or ‘public’ law thinking? And finally, what is the appropriate role of ‘technocratic’ instruments such as indicators in global (re)distribution of financial resources? The main argument is that the CPIA is a promising tool to make development more effective, but that it also represents a powerful exercise of international public authority which requires an appropriate public law framework. This framework already exists in part within the administrative law of development cooperation, which enables us to transform certain concerns about the CPIA’s effectiveness and legitimacy into legal arguments. However, this framework remains deficient and must be further developed, for which the article makes some concrete suggestions. The article proceeds in three main steps: It first develops an analytical and regulatory framework for indicators used in development cooperation. It then applies this framework to the CPIA, analysing its genealogy, contents, and effects, as well as existing mechanisms of participation, reason-giving, transparency, and review. The third section evaluates the CPIA’s existing legal regime against the principles of development cooperation law, namely development-orientation and efficacy as well as collective and individual autonomy. The conclusion reflects on how this framework potentially captures the tensions between distributive politics and expert-driven, technocratic instruments like indicators.