The Political Economy of Project Preparation: An Empirical Analysis of World Bank Projects

Abstract

In the last few years, numerous econometric studies have unearthed evidence of donor influence over the geographic distribution of funds from international financial institutions (IFIs). Scholars are now beginning to use quantitative methods to delve into the details of donor influence to understand better how IFIs function and to guide institutional reform. The evidence suggests that donors influence both the amount of funds committed (the number and size of loans) and the disbursement of committed funds. This paper advances the literature by applying stochastic frontier analysis to a novel data source to examine factors that affect how quickly World Bank projects proceed from identification to approval, i.e., how long it takes to prepare a project. Accelerated preparation is one explanation for how the World Bank might increase the number of loans to a recipient member country within a fixed time frame, for example in response to that country siding with powerful donor countries on important UN votes or while that country occupies an elected seat on the UN Security Council or the World Bank Executive Board.