Column (vi) adds an interaction term, equal to the product of _Credit Rating_ and the time trend. Middle-income countries had increasing access to funds raised on private capital markets over the 1982-2008 period (Ceballos, Didier, and Schmukler 2010), so their creditworthiness – measured by the perceived likelihood that sovereign debt obligations will be honored – may have become more relevant to graduation decisions later in the period. The positive and significant coefficient on the interaction term is consistent with this hypothesis.<sup>28</sup> One institutional and governance variable that we are not able to use in our model variations is the World Bank Country Policy and Institutional Analysis (CPIA). CPIA scores are available only for non-graduates, and so cannot be used for a probit to explain graduation status. But looking at the data permits us to answer the question of whether there appears to be a “threshold level” of average CPIA score above which graduation is likely. The CPIA indicators have been defined consistently since 1998, and over that period seven countries (all in Eastern and Central Europe) have graduated, all between 2004 and 2008. On a scale of 1 to 6, their average CPIA score a year before graduating was 4.9, with a range of 4.4 to 5.5. By comparison, the above-threshold countries that had not yet graduated had an average score of 4.2 in these years, with an average minimum score of 2.4 and an average maximum of 5.2. In every case but two, some non-graduate had a CPIA score exceeding that of the new graduate. So while there is no single threshold CPIA level that is necessary and sufficient for graduation, countries this decade have not graduated without relatively high CPIA scores.<sup>29</sup> We also considered the possible relevance of political economy explanations for World Bank decision making. Specifically, we tested for the impact of temporary UN Security Council membership on graduation. Dreher, Sturm and Vreeland (2009) find that temporary members of the UNSC receive more World Bank projects, although loan size is unaffected. One interpretation of this finding is that large donor countries represented on the Bank’s Executive Board may sometimes approve loans in exchange for favorable votes in the UNSC. However, we believe this argument has little relevance to graduation decisions, which have been largely consensual in practice, although the Executive Directors have the authority to graduate a country involuntarily (Shihata, 2000). Consistent with this view, a dummy for temporary UNSC membership falls far short of significance when added to our graduation regressions.<sup>30</sup>

> 28 Calculating coefficient estimates and standard errors for _Credit Rating_ conditional on different years (i.e. the time trend variable), we find negative but insignificant point estimates for 1982 through 1989; with positive estimates thereafter, becoming significant at the .10 level in 1996 and at the .05 level in 1998.  Results on _Credit Rating_ shown in the table are conditional on the average value (1997) of the time trend variable.

> 29 CPIA ratings for individual IBRD countries cannot be made public under Bank policy, which is why only aggregates are reported here.

> 30 Results available on request.  Similarly, voting compatibility with the interest of major donors in the UN General Assembly does not help explain graduation decisions.  Kilby (2006), among others, finds evidence that the geopolitical interests of large donor countries, as proxied by General Assembly voting patterns, affect aid allocations of some international financial institutions.

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