share of Bank assistance to IBRD countries and, to a lesser extent, IDA countries. Bank assistance for capacity building, in particular, focused mainly on the core public sector, sector administration, and workforce development. More modest commitments were made in support of private sector and demand-side capacity building.

The Bank also attempted to adopt new operational approaches in order to support country ownership and domestic accountability. The launch of PRSPs provided an impetus to try new aid modalities in IDA countries, including a shift to programmatic budget support and multisector investment operations; analytical and advisory activities to develop country-led governance strategies; and efforts to harmonize activities with other donors.<sup>19</sup> In addition, the Bank committed itself increasingly to use—rather than bypass—country systems (World Bank 2003a). The Bank also attempted innovations in its financial and nonfinancial product lines to provide added incentives for institutional change. By the mid-2000s, these efforts produced some tangible results, for example, in public financial management and revenue administration. A 2008 IEG review claims that Bank support in those two areas gained traction (IEG 2008b). So did Bank support for merit-based recruitment and promotion. Outside observers began to take notice of these improvements in the Bank‘s approach. For example, a 2002 global poll of opinion leaders across regions—in particular in Africa—noted that “improvements outweighed setbacks” in the Bank’s efforts to strengthen governance. Certain aspects of Bank support (for instance, civil service reforms and anticorruption efforts) did not produce the desired results. Direct measures, such as the promulgation of anticorruption laws and the establishment of anticorruption commissions, did not reduce the perceived incidence of corruption in countries (IEG 2008b). The global poll showed that efforts to reduce corruption remained one of the Bank‘s least effective efforts.

How to support institution building, particularly in fragile states,<sup>20</sup> was viewed as a major operational challenge. For instance, two separate 2005 reviews (an IEG evaluation and a World Bank Africa Capacity Development Taskforce) found that capacity building efforts in Africa were fragmented. The Bank often lacked the knowledge base and programmatic tools required to make a lasting impact, particularly in sectors. Capacity building was seen as a “governance challenge” because it requires a balance between state building and social accountability. The Bank recommended consolidating its existing capacity-building business lines and expanding new ones (for instance, in areas relating to the demand side). It also identified the need for more flexible lending instruments, a more proactive stance on the use of country systems, and a reform of donor approaches to technical cooperation.

> 19  T hese efforts were not always successful.  The Economist magazine (April 7, 2007, pp 57-58) which ironically calls donors “the non-aligned movement” says that “only about 65 percent of aid actually arrives on schedule, according to the OECD. Finance ministers must cope with shortfalls and windfalls. Zambia was due to receive $930 million in 2005, but ended up with just $696 million. Vietnam, which was expecting about $400 million, got roughly $2 billion. Because the aid they receive is such a capricious, volatile commodity, governments dare not make full use of it. They could hire legions of extra teachers, clinicians and civil servants, but only if they are prepared to fire them when the aid spigot is closed. They could put AIDS-sufferers on anti-retroviral therapies, but only if they are willing to discontinue treatment once the money stops. Not surprisingly, some governments choose to hoard aid rather than spend it. In 2001-03, Ghana received an extra $1.3 billion of aid; $1.2 billion collected in the vaults of its central bank. Aid is also poorly coordinated.”

> 20 Of the 62 countries which had implemented PRSPs in 2007, 21 were fragile states.

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