Delegation of implementation in project aid

Abstract

In this paper we explore the factors that determine delegation of implementation in project aid. In particular, focusing on the importance of informational asymmetry between levels of government, we empirically assess whether this choice is influenced by the relative importance of the local information at the recipient country level. Moreover, we test whether this choice can in turn influence project performance. Using information on more than 5800 World Bank projects for the period 1995-2014, and controlling for characteristics at both country and project level, we find that transparency does influence the probability that a project is implemented locally rather than nationally. More specifically, a one standard deviation decline in transparency increases the probability of a locally implemented project by three percentage points. We also find that a local implementing agency may increase the probability of a successful project only up to a certain level of a country’s transparency.

Managing performance and winning trust: how World Bank staff shape recipient performance

“…Donors react to the level of corruption in recipient countries and try to minimize the use of country implementation systems in specific contexts (Dietrich 2013;Knack 2013;Winters 2014). Similarly, if a country is faced with substantial fragility, the project environment is much less predictable, which necessitates more decentralized decision-making in implementation (Honig 2019;Marchesi and Masi 2020).…”

Using foreign aid contracts to pursue participatory approaches to development within large foreign aid agencies

“…Participatory approaches have also ridden a wave of popularity as an important and widely adopted approach for improving the effectiveness and appropriateness of development by all types of aid practitioners (White, 1999; Mansuri et al., 2012). Donors may pursue a participatory approach even in the absence of external pressure to capture its purported benefits: (1) the potential to make aid activities more effective by solving an information problem (collecting information to design activities that are appropriately tailored to the local context) (Eckhard et al., 2020; Gulrajani, 2014; Honig, 2018, 2020; Honig et al., 2018; Marchesi and Masi, 2020), and (2) the potential to instill local ownership over aid activities (increasing buy‐in for activities and sustainability of outcomes) (Biggs and Smith, 2003; Cleaver, 1999; Korten, 1980; Mosse, 2005). Proponents argue that these participatory benefits lead to improved development outcomes that better address underlying problems and make approaches more sustainable (Atwood, 1993; White, 1999).…”

“…These limiting factors include political priorities, existing institutions and requirements for policy delivery, pressure to maximize efficiency, and regulations geared toward ensuring high levels of accountability (Gibson et al., 2005; Gulrajani, 2014; LaChimia and Trepte, 2019; Martens et al., 2002; Mosse, 2005). Despite the seemingly prohibitive constraints, proclamations of support for participatory approaches and their ability to increase development outcomes abound (USAID Forward, 2014; White, 1999; Atwood, 1993), and scholarship on the presence and potential of decentralized decision‐making power within aid work is growing (Dreher et al., 2017; Eckhard and Parizek., 2020; Gulrajani, 2017; Hermano et al., 2012; Honig, 2018, 2020; Marchesi and Masi, 2020).…”

Sorting out the aid–corruption nexus

“… 10 Examples include Blair and Roessler (2021), Dreher et al (2021), Eichenauer et al (2020), Marchesi and Masi (2020), Seim et al (2020), and Dreher et al (2019). However, AidData – like conventional ODA sources – does not include aid from countries like Russia (and, formerly, the Soviet Union) and China (see Tierney et al, 2011: fn.…”