Governance and aid allocation in the International Development Association (IDA) : revisiting assessing aid in the twenty-first century

Abstract

This paper examines the relationship between governance and the foreign aid allocation of a World Bank agency, the International Development Association. In particular, the study investigates whether this major multilateral program's financial support for the development of the world's poorest countries consistently prioritizes good governance. A new dataset from the first decade of the twenty-first century, 2003-12, is used in three econometric estimation models to determine whether the quality of governance in recipient countries has had implications for aid allocation decisions. As in much of the literature in this area, the results are mixed. This finding itself raises important questions both about the relevance of a country's governance to aid allocation decisions and about the usefulness of good governance as a metric by which aid organizations are judged.