World Bank Policy Lending and the Quality of Public Sector Governance
This study investigates the impact of World Bank development policy lending for public sector governance on the quality of public sector management and institutions. The World Bank’s Country Policy and Institutional Assessments (CPIA) are used to m...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/05/24491011/world-bank-policy-lending-quality-public-sector-governance http://hdl.handle.net/10986/22001 |
| Summary: | This study investigates the impact of
World Bank development policy lending for public sector
governance on the quality of public sector management and
institutions. The World Bank’s Country Policy and
Institutional Assessments (CPIA) are used to measure the
latter, the study considers only policy conditions targeted
at improvements in those areas. The analysis uses a
comprehensive country-year panel data set of aid
receiving-countries and finds a significant and inverse
U-shaped effect of public sector conditions on the quality
of public sector governance. For most observed values in the
data, the impact is positive, but it turns negative beyond a
value of 80 conditions. At that point, the predicted CPIA
score is about 0.25 point (0.3 standard deviation) higher
than with zero conditions. For most observations, the number
of cumulative conditions is below 80, so the estimated
effect of more conditions is generally positive. The
analysis corrects for potential endogeneity and shows that
the results are robust to sample restrictions, the use of an
alternative governance measure, and the inclusion of an
extended set of control variables. Falsification tests are
also consistent with a causal interpretation from conditions
to quality of public sector governance. The paper shows that
conditions related to public financial management and tax
reforms are more effective than those related to
anti-corruption or civil service and administrative reform,
where progress requires changing the behavior of a larger
set of “deconcentrated” actors. The paper concludes by
describing some innovative ideas in the Bank’s ambitious new
public sector management strategy that could improve the
effectiveness of its support for public sector governance reform. |
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