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Better Policies from Policy-Selective Aid / Kurt Annen.
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Annen, Kurt.
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Aid Policy.
- Country Policy.
- Development Economics and Aid Effectiveness.
- Donor Conditionality.
- Economic Policy, Institutions and Governance.
- Governance.
- Inequality.
- Institutional Assessment.
- Macroeconomics and Economic Growth.
- National Governance.
- Official Development Assistance.
- Poverty Reduction.
- Social Protections and Assistance.
- Local Subjects:
- Aid Policy.
- Country Policy.
- Development Economics and Aid Effectiveness.
- Donor Conditionality.
- Economic Policy, Institutions and Governance.
- Governance.
- Inequality.
- Institutional Assessment.
- Macroeconomics and Economic Growth.
- National Governance.
- Official Development Assistance.
- Poverty Reduction.
- Social Protections and Assistance.
- Physical Description:
- 1 online resource (27 pages)
- Place of Publication:
- Washington, D.C. : The World Bank, 2019.
- System Details:
- data file
- Summary:
- This paper shows that the increased policy-selectivity of aid allocations observed in recent years provides recipient countries an incentive to improve policies. The paper estimates that a change in the World Banks Country Policy and Institutional Assessment policy index from 1.5 to 2 for a recipient is associated with an increase of about 13 percent in aid. The analysis also finds a modest but statistically significant positive relationship between the share of policy-selective aid in the global aid budget and policy, suggesting that policy-selective aid improves policies. This effect is properly identified, as the share of policy-selective aid in the global aid budget is exogenous to recipient country policy choices. Furthermore, the paper provides a game theoretic model that establishes the link between the policy-selectivity of the global budget and better recipient country policies in equilibrium.
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