Better Policies from Policy-Selective Aid?

Better Policies from Policy-Selective Aid?

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...

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Main Authors: Annen, Kurt, Knack, Stephen
Format: Working Paper
Language:English
Published: World Bank, Washington, DC 2019
Subjects:
COUNTRY POLICY AND INSTITUTIONAL ASSESSMENT
DONOR CONDITIONALITY
GOVERNANCE
AID POLICY
OFFICIAL DEVELOPMENT ASSISTANCE
Online Access:http://documents.worldbank.org/curated/en/364041560779299046/Better-Policies-from-Policy-Selective-Aid
http://hdl.handle.net/10986/31902
id okr-10986-31902
recordtype oai_dc
spelling okr-10986-319022022-05-21T06:14:12Z Better Policies from Policy-Selective Aid? Annen, Kurt Knack, Stephen COUNTRY POLICY AND INSTITUTIONAL ASSESSMENT DONOR CONDITIONALITY GOVERNANCE AID POLICY OFFICIAL DEVELOPMENT ASSISTANCE 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. 2019-06-19T15:35:52Z 2019-06-19T15:35:52Z 2019-06 Working Paper http://documents.worldbank.org/curated/en/364041560779299046/Better-Policies-from-Policy-Selective-Aid http://hdl.handle.net/10986/31902 English Policy Research Working Paper;No. 8889 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic COUNTRY POLICY AND INSTITUTIONAL ASSESSMENT
DONOR CONDITIONALITY
GOVERNANCE
AID POLICY
OFFICIAL DEVELOPMENT ASSISTANCE
spellingShingle COUNTRY POLICY AND INSTITUTIONAL ASSESSMENT
DONOR CONDITIONALITY
GOVERNANCE
AID POLICY
OFFICIAL DEVELOPMENT ASSISTANCE
Annen, Kurt
Knack, Stephen
Better Policies from Policy-Selective Aid?
relation Policy Research Working Paper;No. 8889
description 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.
format Working Paper
author Annen, Kurt
Knack, Stephen
author_facet Annen, Kurt
Knack, Stephen
author_sort Annen, Kurt
title Better Policies from Policy-Selective Aid?
title_short Better Policies from Policy-Selective Aid?
title_full Better Policies from Policy-Selective Aid?
title_fullStr Better Policies from Policy-Selective Aid?
title_full_unstemmed Better Policies from Policy-Selective Aid?
title_sort better policies from policy-selective aid?
publisher World Bank, Washington, DC
publishDate 2019
url http://documents.worldbank.org/curated/en/364041560779299046/Better-Policies-from-Policy-Selective-Aid
http://hdl.handle.net/10986/31902
_version_ 1764475328583958528

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