Which Wheel Gets the Grease? Constituent Agency and Sub-national World Bank Aid Allocation

Abstract

Questions of aid allocation have long focused on discerning the motivation of development donors. Less attention has been paid to the interests and agency of recipient state governments and even less to the interests and agency of constituencies within those states. An implicit assumption is often that the 'poor' either passively receive the patronage of their benefactors or they don't. In this paper, we instead suggest that depending on the motivation of a donor, their sensitivity to needy subnational constituencies in aid allocation also depends on the political empowerment of those groups. In particular, we take advantage of the unique socio-cultural structure in India to examine if the political agency of scheduled castes and tribes (SC/STs) can explain patterns of district-level allocation of World Bank education aid. Using district-level data on a multiyear World Bank education program, district-level proportions of SC/ST population and of members of parliament we identify poor, but empowered, constituencies. We find that SC/ST districts receive more aid, even when controlling for baseline poverty and educational performance, but that these results are strongest when these districts are politically empowered. Our findings suggest that while donors may indeed respond to recipient needs, those recipients who also speak loudly for themselves fare better, highlighting the importance of constituent agency.

The economic efficiency of aid targeting

“…Taking a political economy approach, Jablonski (2014) finds that within Kenya, WB and ADB projects are disproportionately located in constituencies with higher incumbent vote shares, while Caldeira (2011) show that government finance in Senegal is allocated disproportionately to swing electoral districts, with little evidence of equity considerations. Song, Brazys, and Vadlamannati (2021) show that the political empowerment of local groups has influenced the allocation of education aid from the World Bank in India. Dreher et al (2019) show that Chinese foreign aid to African nations is disproportionately provided to a national leader’s home or co-ethnic region, but that WB projects do not exhibit such favoritism.…”

The Political Economy of Donor Control and Elite Capture in Arsenic Mitigation in Bangladesh

“…While donors may wish to exert control over when, where, and how resources are allocated, recipients may seek to capture those flows to advance their own political or economic goals (Milner et al, 2016). A raft of studies has examined these dynamics in a subnational setting (Briggs, 2017; Jung, 2020; Marineau & Findley, 2020; Reinsberg & Dellepiane, 2021; Song et al, 2021), often finding that donor aims for when, where, or how resources should be directed may be ultimately frustrated and that aid does not reach the recipients or fulfill the purpose intended by the donor.…”