Is the World Bank Responsive to Informal Institutions? Some Research Thoughts…

Do World Bank projects that account for informal institutions have better development outcomes? The World Bank works in settings ripe with informal institutions throughout the developing world.  Issues such as clientelism, where legislators might highjack benefits of a development project and claim them as their own to gain votes, or ethnic tensions that disrupt project implementation as a result of conflict, are common kinds of occurrences.  I decided to undertake this research topic for presentation at this year’s annual American Political Science Association meeting.

I started exploring the intersection between informal institutions—e.g. clientelism, rent seeking, cultural practices, norms, and other traditions—and international development activities. A host of scholars address the issue of informal institutions in international development. It doesn’t take a rocket scientist to acknowledge the need to incorporate informal political and social relations into international development projects. Knowing how markets and social relations work on the ground before designing a project is pretty damn important. This has long been recognized by academics and international organizations alike.  But, in practice, however, we often encounter a different story.  International organizations face a myriad of pressures in designing new projects, and these days project teams are often stretched thinner and thinner in meeting time constraints, budget constraints, and institutional needs. While much effort is documented in terms of understanding the local context during the design of projects—whether it has to do with why an HIV project is failing in SubSaharan Africa or women aren’t taking full advantage of a government sponsored microfinance program in South Asia—the World Bank and other international organizations are often criticized for being out of touch with the local environments in which they operate.

My recent research assesses (1) the degree to which the World Bank accounts for informal institutions in the design of projects (both before and after the implementation of the 2007 Governance and Anticorruption Strategy); and (2) what influence accounting for informal institutions has on the success of World Bank projects (development outcome ratings).

Results suggest that the World Bank is relatively good at accounting for informal institutions in the design of development projects; 87% of 155 projects used in the analysis identify informal institutions in project design. Moreover, after the implementation of the 2007 Governance and Anticorruption Strategy, Development Outcome Ratings have improved in projects that identify informal institutions.  This might be explained, in part, due to the GAC Strategy implementation and other institutional efforts to improve Political Economy Analysis.This paper looks at what the Bank has been doing to identify informal relations, and poses some thoughts on how project design might further incorporate informal social and political relations.

Link to the Paper: http://ssrn.com/abstract=2110112

APSA Poster:

Note: This research has been prepared for presentation at the 2012 Annual Meeting of the American Political Science Association. This research paper is written independently of the World Bank.  The research conducted and any views expressed are entirely those of the author.

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