An Empirical Assessment of Informal Influence in the World Bank

The article attempts to isolate post approval informal influence by examining world bank disbursements after controlling for prior commitments. If donor influence over the flow of funds is largely confined to board approval of projects and thus commitments, subsequent geopolitical events should have...

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Journal Title: Economic Development and Cultural Change Vol. 61; no. 2; pp. 431 - 464
Author: Christopher Kilby
Format: Article
Language: English
Published: January 2013
Subjects:
Summary: The article attempts to isolate post approval informal influence by examining world bank disbursements after controlling for prior commitments. If donor influence over the flow of funds is largely confined to board approval of projects and thus commitments, subsequent geopolitical events should have no influence on the flow of these already committed funds from the bank to the borrower. There is now a well-established literature investigating donor influence in international financial institutions (IFI). The Board of Executive Directors then reviews cases to see whether the program should be reinstated. Stone finds that reinstatements happen more expeditiously for geopolitically important countries. This work provides evidence of formal influence, as board decisions appear to reflect not only economic factors but also the interests of powerful countries. In contrast, disbursement decisions on project lending typically happen at a much smaller scale. Individual investment loans average one-third the size of development policy loans and disburse gradually as a multitude of individual expenditures are verified and approved.
ISSN: 0013-0079
DOI: 10.1086/668278