# **2** Previous Literature

The existing repertoire of literature examining World Bank project effectiveness is too numerous to be cited in full. Previous studies can generally be divided into three broad categories, examining region- and sector-specific work, the political determinants of project effectiveness, and the internal dynamics of project management influencing performance. Much of the aggregative work focuses on the importance of project design and management, whereas sector- and region-specific work emphasizes the impact of cross-national and industrial variation in determining whether a disbursement project is ultimately successful. Some of the more relevant work relating to these two camps will now be examined.

One of the earliest assessments of project effectiveness tested the rates of return from Bank projects at inception as opposed to completion, accounting for the divergences in productivity across a large sample of completed projects. Pohl and Mihaljek (1992) analyzed the World Bank’s project evaluation record using a sample of 1,015 projects via a comparison of rates of return at appraisal and completion (typically accounting for a ten-year project lifespan). They found that cost overruns and implementation delays have a small but negative impact on project performance, specifically in agricultural and industrial projects. The paper also noted a discrepancy between expected and actual rates of return, noting that World Bank appraisal estimates were often overly optimistic. Their analysis emphasized the importance of the macroeconomic environment, which they note to be more substantively significant than the other indicators considered and an under-emphasized element in project evaluation.

Similarly, Kilby (2012) uses a measure of economic vulnerability (as measured by the ratio of the recipient country’s short-term to long-term debt) to assess project performance. Projects with longer preparation times are expected to perform better, conditional on the degree of economic vulnerability: when project design takes into account the underlying economic conditions of the donor country, the initiatives tend to perform better.<sup>3</sup> These findings support both Kilby (2011) and Dreher et al.’s (2009) work on the political economy of World Bank lending projects, which states that the political motivations of donor countries can lead to insufficiently prepared and underperforming projects. Both papers emphasize the importance of project design and preparation. Kilby (2011) notes that politically motivated projects can sometimes be rushed into implementation, whereas Dreher et al. show that politically motivated projects significantly under-perform in economically vulnerable countries.

Taking a more generalizable approach, Ika, Diallo, and Thuillier (2012) expand the typology for project failure outside project design, highlighting five “Critical Success Factors” (CSFs) encompassing monitoring, coordination, design, training, and the institutional environment. They look beyond the internal dynamics of project design, expanding to include elements of the general economic and social environment in which projects are implemented. Each of the five CSFs are positively related to project success, with project design and monitoring showing strong substantive significance.

Moll, Geli, and Saavedra (2015) assess the correlates of success in World Bank development policy lending, showing that individual loan characteristics such as task team leader proficiency, leadership, and project design had a significant effect on improving the chances of project success. Interestingly, Moll and co-authors find that certain sectoral reforms (for instance, energy-sector reforms) tend

> 3For a similar analysis, see also Tariq, Rabbia, Abdul Jalil, and H. Sector. “What Explains the Success and Failure of the World Bank Projects? A Cross Country Analysis.” S3H Working Paper Series. (2017).

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