Poverty and Policy Selectivity of World Bank Trust Funds

Poverty and Policy Selectivity of World Bank Trust Funds

Over the past decade, donors of foreign aid quadrupled their annual contributions to trust funds at the World Bank. This earmarking of contributions to donors' preferred recipient countries and issues has raised concerns about the alignment of...

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Bibliographic Details
Main Authors:	Eichenauer, Vera, Knack, Stephen
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2016
Subjects:	ALLIANCE LIMITED MODALITIES CAPITAL MARKETS FINANCIAL SERVICES BILATERAL AID MULTILATERAL AID BOARD MEMBERS FISCAL YEAR DEVELOPMENT ASSISTANCE CHECKS ACCOUNTING CORPORATION INTERNATIONAL POLITICS PRINCIPAL POST‐CONFLICT” COUNTRIES INTEREST TRUST FUNDS DUMMY VARIABLES AID INSTITUTIONS NATIONS ALLOCATION DECISIONS AID FINANCING EXCHANGE POLITICAL ECONOMIES FINANCIAL SUPPORT SERVICES DEVELOPING COUNTRIES PUBLIC SERVICES POLITICAL ECONOMY POSITIVE COEFFICIENT PORTFOLIO COMPANIES RECIPIENT COUNTRIES CREDITWORTHINESS PROJECTS COLLECTIVE INTEREST BORROWERS MULTILATERAL DEVELOPMENT BANKS MULTILATERAL AGENCIES BILATERAL” AID GOVERNMENT SUPPORTS VOLUNTARY CONTRIBUTIONS DUMMY VARIABLE CONFLICT INTERNATIONAL BANK CREDITOR BUDGET INTERNATIONAL FINANCE ARMED CONFLICT PROJECT IMPLEMENTATION STATES TECHNICAL ASSISTANCE PARTNERSHIPS DISBURSEMENT FOREIGN AID UNION PROXY ECONOMIC COOPERATION TRADING MONETARY FUND FINANCIAL ACCOUNTING NATURAL DISASTERS CRITERIA MARKETS INTERNATIONAL DEVELOPMENT WORLD DEVELOPMENT TRUST ORGANIZATIONS NEGOTIATIONS INCOME LEVELS ECONOMIC POLICIES LOANS HEALTH AID GROSS DOMESTIC PRODUCT FINANCE BANK POLICY DIRECTORS INFRASTRUCTURE BANKS EQUITY GRANT DONOR COUNTRIES IMF ACCOUNTABILITY MEMBER STATES TRANCHE ACCESS TO CAPITAL FUTURE VALUE INTERNATIONAL STUDIES DEVELOPMENT BANKS INVESTIGATION BANK BUDGETS ASSOCIATION COLLECTIVE DISBURSEMENTS ECONOMY REFUGEE DEVELOPING‐COUNTRY DEVELOPMENT AID INSTITUTIONAL CAPACITY SHARES MARKET UNITED NATIONS SECURITY COUNCIL IFC GOVERNANCE SHAREHOLDERS INTERESTS STATE GOODS SECURITY TRUSTEE WAR IBRD SHARE ORGANIZATION EQUALITY TRUST‐FUNDS POVERTY CRISES DEVELOPMENT FINANCE UNIVERSITY RECIPIENT COUNTRY LENDING TRUST FUND AID FLOWS STATISTICAL ANALYSIS POST‐CONFLICT COUNTRIES PRIVATE COMPANIES EXCHANGE RATE INSTRUMENT RATES OF INTEREST GOVERNMENTS ARREARS RECONSTRUCTION ECONOMIES HUMAN DEVELOPMENT ENVIRONMENTAL POLICIES
Online Access:	http://documents.worldbank.org/curated/en/2016/06/26532670/poverty-policy-selectivity-world-bank-trust-funds http://hdl.handle.net/10986/24648

Description
Summary:	Over the past decade, donors of foreign aid quadrupled their annual contributions to trust funds at the World Bank. This earmarking of contributions to donors' preferred recipient countries and issues has raised concerns about the alignment of trust funds with the performance-based allocations of aid by the International Development Association, the World Bank's concessional lending arm, and raises the question of the role of this new "multi-bi" aid channel. This study finds that the cross-country allocations of aggregate trust fund aid are poverty- and policy-selective. In this respect, they are much more similar to allocations from the International Development Association than from bilateral donors. The allocations of trust fund types that are more closely controlled by donor countries—recipient-executed and single-donor trust funds—are more strongly related to the strategic interests of donor countries than trust fund aid in general. Trust funds for health and education aid are poverty selective and positively correlated with the World Bank's assessment of the quality of countries' sector policies, while environmental trust funds are neither poverty selective nor correlated with the assessed quality of countries' environmental policies. Overall, the evidence indicates that multi-bi funds administered by the World Bank do not undermine the International Development Association’s allocation criteria.

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