**<u>Table 2: Share of countries borrowing for public sector reforms (approved between FY00 and 10)</u>**

||Total number of<br>countries counted|Number of<br>countries with no<br>PSG operation|Number of<br>countries with one<br>or more operations|Number of<br>countries with 2<br>or more<br>operations|Number of<br>countries with 4<br>or more<br>operations|
|---|---|---|---|---|---|
|#|128|41|87|61|19|
|_%_|_100_|_32_|_68_|_48_|_15_|

Note: PSGB mapped development policy and investment operations only. Source: Business Warehouse data on PSGB mapped policy and investment loans/grants (active and closed).

Nearly half of all potential client countries (with populations greater than 500,000) had two or more Bank operations. A smaller group (19 countries) had 4 or more. It includes several large and/or federal countries (Argentina, Brazil, Mexico, and Russia), some countries with special conditions (Chad related to the Chad-Cameroon pipeline), some fragile states with significant Bank engagement (Afghanistan, Kosovo, Sierra Leone, Timor Leste), and various others (Ethiopia, Tanzania, and Uganda). Regionally, the spread is relatively even, with some patchiness in Sub-Saharan Africa and relatively strong engagement with MICs in Europe and Central Asia (ECA) and Latin America (LAC). The Middle East and North Africa (MENA) region stands out with relatively few public sector operations (only 7 out of 15 countries/territories with at least one lending operation).<sup>24</sup> This pattern is consistent with the notion that incentives to initiate public sector reforms are significant across LICs and MICs. As such, the decision by governments to _borrow_ for public sector reforms (rather than using potential grant-funded resources) could be seen to signal political commitment to such reforms – although this is not consistently the case, as will be discussed below.

Furthermore, a closer look at which countries borrow for public sector reforms at least in part contradicts a widespread perception, as reflected in Schacter (2001), that public sector reform efforts are pre-dominantly driven by donor pressures in countries dependent on external aid. In fact, only 25 percent of the countries with at least one World Bank public sector operation in the past decade had aid dependency ratios of more than 10 percent, and a number of MICs with little dependency on aid have sought multiple operations.<sup>25</sup> Thus, while there is a group of low income, aid dependent countries that seek World Bank support for public sector operations, the larger share of such operations has actually been focused on countries with modest to low levels of aid dependency. This suggests that other incentives to initiate public sector reforms among those noted in section two, such as globalization and regional integration and ̳contagion‘, play a role in a substantial number of countries.

> unit (OPCFM), Fee-Based Services (FBS) and IDF (Institutional Development Fund) grants were included, an even wider spread would result.

> 24 Several countries in the region have fee for service arrangements with the World Bank which are not counted here.

> 25 Based on the Bank‘s Development Data Platform (DDP) database results for  ̳Net Official Development Assistance (ODA) received in % of GNI‘ for the 87 countries with at least one public sector operation over the past decade.

24