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Inside the World Bank’s Black Box Allocation System: How Well Does IDA Allocate Resources to the Neediest and Most Vulnerable Countries?

Author

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  • Benjamin Leo
Abstract
During the last few International Development Association (IDA) replenishment negotiations, several large donors have pressed for reforms to further increase the share of IDA resources provided to the neediest and most vulnerable countries. While the proposed reforms take different forms, the philosophical thrust is the same—push IDA’s focus further down the development chain. Against this backdrop, this paper explores just how well IDA’s existing performance-based allocation (PBA) system actually addresses these issues. To achieve this, I examine how IDA allocations are distributed at each successive stage of the PBA methodology based upon a number of need and vulnerability measures. Next, I apply two simple measures to gauge IDA’s performance: (1) whether per-capita allocations to the neediest and most vulnerable countries are equal to or greater than those for the best off countries and (2) whether allocations to the neediest and most vulnerable countries increase between the baseline and final allocation scenarios. Based on these criteria, IDA has a mixed track record. IDA’s performance is very modest with respect to the relative share allocated to the neediest or most vulnerable countries. Of the eight measures examined, only two illustrate parity between final allocations to the bottom and top quartile of countries. However, the litany of PBA exceptions clearly helps to redistribute resources in absolute terms. Per-capita allocations to the neediest and most vulnerable countries more than doubles between the baseline and final PBA scenarios for every need and vulnerability indicator examined. Clearly, the existing system has several built-in biases to redistribute resources to these countries. However, these exceptions fall short from ensuring full parity that some IDA donors may wish to achieve. As such, the philosophical debate among key IDA donors likely will continue for the foreseeable future.

Suggested Citation

  • Benjamin Leo, 2010. "Inside the World Bank’s Black Box Allocation System: How Well Does IDA Allocate Resources to the Neediest and Most Vulnerable Countries?," Working Papers 216, Center for Global Development.
    • Handle: RePEc:cgd:wpaper:216
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    Citations

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    Cited by:

    1. Guillaumont, Patrick & Guillaumont Jeanneney, Sylviane & Wagner, Laurent, 2017. "How to Take into Account Vulnerability in Aid Allocation Criteria and Lack of Human Capital as Well: Improving the Performance Based Allocation," World Development, Elsevier, vol. 90(C), pages 27-40.
    2. Kanbur, Ravi, 2012. "Aid To The Poor In Middle Income Countries And The Future Of Ida," Working Papers 128795, Cornell University, Department of Applied Economics and Management.
    3. Kanbur, Ravi, 2011. "Poor Countries or Poor People? Development Assistance and the New Geography of Global Poverty," CEPR Discussion Papers 8489, C.E.P.R. Discussion Papers.
    4. Ravi Kanbur, 2016. "Can a Country Be a Donor and a Recipient of Aid?," India Studies in Business and Economics, in: S. Mahendra Dev & P.G. Babu (ed.), Development in India, edition 127, chapter 0, pages 71-81, Springer.
    5. Alan Gelb, 2010. "How Can Donors Create Incentives for Results and Flexibility for Fragile States? A Proposal for IDA," Working Papers id:3233, eSocialSciences.
    6. Ravi Kanbur, 2012. "Aid To The Poor In Middle Income Countries And The Future Of The International Development Association," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 1-9.

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