How Does the World Bank Influence the Development Policy Priorities of Low-Income and Lower-Middle Income Countries?

Abstract

How does the World Bank’s use of lending and non-lending instruments affect the policy priorities of developing countries? We consider how certain forms of external assistance can shape the incentives of political leaders and the ideational environment within which they work in ways that promote reform. With new data on the delivery of analytical and advisory products and micro-level survey data from 1244 public sector officials in 121 developing countries, we find a consistently positive but not statistically significant association between the World Bank’s delivery of “Economic and Sector Work” products and the degree to which public sector officials perceive the multilateral institution to be effective in shaping the direction of government policy. We do not find a detectable effect of economic and sector work on the perceived utility of the World Bank’s advice or engagement during policy reform implementation. Nor do we find any evidence that the World Bank’s development policy lending consistently affects its perceived influence on the direction, design, or implementation of government policy. These findings have important implications for understanding both the effectiveness of development assistance and the conditions under which international institutions can influence the policy priorities of developing countries.