The Political Economy of World Bank Aid

This paper studies whether political favoritism determines the allocation of World Bank projects to African countries. I collect personal data on the Bank's Board of Directors, and compute a measure of political representation. The results show that the Board's bias towards a project has a strong impact on the likelihood that the implementing region will receive more aid. The results also serve as a convincing instrument to estimate the effectiveness of foreign aid in fostering development.., and compute a measure of political representation. The results show that the Board's bias towards a project has a strong impact on the likelihood that the implementing region will receive more aid. The results also serve as a convincing instrument to estimate the effectiveness of foreign aid in fostering development.