Assessing the impact of World Bank preparation on project outcomes

Abstract

This paper assesses the impact of World Bank project preparation on project outcomes via a two-step estimation procedure. Using a stochastic frontier model, I generate a measure of World Bank project preparation duration based only on variation in political economy factors that are exogenous to latent project quality. Panel analysis of project data finds that projects with longer preparation periods are significantly more likely to have satisfactory outcome ratings. This result is robust across a range of specifications but the effects are conditional on the degree of economic vulnerability. The impact of World Bank preparation is greater in countries experiencing debt problems that may have fewer alternatives. Examining the impact of aid agency inputs into project preparation and design offers an alternative approach to measure the contribution of these agencies to development.