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Latest Findings onDevelopment Effectiveness:Lessons Learned

Presentation by Ajay Chhibber, Director andPatrick G. Grasso, Adviser, Independent Evaluation Group,World BankDCF-Vienna High Level Symposium

April 19-20, 2007Vienna, Austria


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Three Core Questions onDevelopment Effectiveness andPoverty Reduction

I. How effectively has economic growthtranslated into poverty reduction? Whatfactors have affected these results?

II. What factors have led to high-quality resultsin sectors that deliver services to the poor?

III. What measures have helped raise theaccountability of public institutions

responsible for delivering and sustainingresults?

IV. What is happening to Aid Flows and Aid

Coordination?


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between OECD and developingcountries

-2

-2

2

2

2

2

2

2

2

Middle-income Low-income Sub-Saharan Africa

Average annual per capita income growth

1960s

1970s

1980s

1990s

2001/6

Source: World Bank

OECD average1980-2006


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u ere s rong ross-country Variability In GrowthPerformance

Growth has improved in most Bank borrowingcountries over the past five years, butachieving sustained growth remains achallenge.

Source: ARDE 2006

2 22 22 22 22

more than %2

%- %2 2

. - %222

- . %222

% to %2 2

less than %2Averageannualg

ro

rateofGDPperc

a

Number of Countries

-22222222 -22222222


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Growth is a Major Factor inPoverty Reduction

-22

-22

2

22

22

22

22

22

E. Asia & Pacific S. Asia M. East & N.

Africa

Latin America &

the Caribbean

Europe & C. Asia

Poverty(%o

fP

opulation)

-2

-2

2

2

2

2

2

Growth(%P

e

rAnnum)

Population Living on Less Than $ a Day ( )2 2222

Population Living on Less Than $ a Day ( )2 2222

Real Per Capita GDP Growth ( - )22222222


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There Are Still Over 1 BillionPeople Living In ExtremePoverty

Number of People Living on Less Than $ /Day 2

2

222

222

2222

2222

East Asia

and

Pacific

China Europe

and

Central

Asia

Latin

America

and

Caribbean

Middle

East and

North

Africa

South

Asia

Sub-

Saharan

Africa

World World

Excluding

China

2222

2222


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Poverty Reduction Remains ASignificant Challenge Even InCountries With Positive Growth Rates

Positive Per Capita Income Growth between the mid-1990sand early-2000s did not always lead to Poverty Reduction in25 countries reviewed by IEG

Note: High growth=average annual per capita GDP growth rate of >2.5%, moderate growth=average annual per capita GDP growth of0%-2.5%, low growth= average annual per capita GDP growth


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Income Distribution HasAffected Poverty Reduction (1)

Growth was an important driver of poverty reduction,but even small changes in income distribution eitherdampened or reinforced growths effects on poverty in25 countries reviewed by IEG.

change in poverty due to change in household income/consumption change in poverty due to change in distribution

Positive growth effect reinforced by improvements

in distribution

-22

-22

-22

-22

-22-

22

-2

-2

-2

-2

2

Mo

ldova

Cameroon

Burk

ina

Faso

Ukra

ine

Armen

ia

Nigeria

Negative growth effect reinforced by

worsening distribution

2

2

2

2

2

22

22

22

22

Hon

duras

Bo

liv

ia

Georg

ia

Ma

dagascar


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Income Distribution HasAffected Poverty Reduction (2)

change in poverty due to change in household income/consumption

change in poverty due to change in household income/consumption change in poverty due to change in distribution

Positive growth effect dampened by worsening

distribution

-22-2-2-2-2

2

2

2

2

2

22

22

Senegal

China-Urban

China-Rural

Albania

Peru

SriLanka

Lithuania

Jordan

Romania

Dom

inicanRepublic

Turkey

Negative growth effect mitigated by

improvements in distribution

-2

-2

-2

2

2

2

2

2

22

Braz

il

Za

mbia

Uru

guay

Pakistan

P t d ti i


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Poverty reduction requiresattention to both growth andopportunities for the poor

literacy

health infrastructure,

environment initial income inequality

Growth is necessary but not sufficient for povertyreduction. Extent to which the poor participate in growthdepends upon

Burkina Faso: Modest annual growth deliveredimpressive poverty reduction based mainlyon increases in farm production

Strategies need to take account of:

where the poor live and how they earn their incomewhat constrains growth in those areas and sectorsconstraints to inter-sectoral mobility such as low skills or

lack of access to capital, infrastructure or markets

job creation access to

credit


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Rural Poverty ReductionRequires More Attention

Rural poverty remains more pervasive thanurban poverty in many countries.

.222

.222

.222

.222

.222

.2222

.2222

RatioofRuraltoUrb

anP

II Wh t f t h l d t


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II. What factors have led tobetter service delivery to thepoor

1. Improve the policy environment

2. Integrate complementary actions fromdifferent sectors

3. Adapt to political and capacity realities

4. Combine short- and long-termobjectives


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1. Good policies and successfulprojects go together

The 18 countries with the best overall policies had 82%

of projects rated satisfactory Sector policies matter, as well as the overall policy

framework. Individual projects have more impact ifanchored in an appropriate and country-owned sectorstrategy.

%2

%22

%22

%22

%22

%22

%22

%22

%22

%22

Above .22 Between & .2 22 Below 2

CPIA Rating2222

Percentsatisfactoryoutcome

-

222222

2

IDA countries22

IDA countries22

IDA countries22


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2. Integrate complementaryactions

Achieving the MDGs requires multiple actions aimed at

the targeted outcomes

Improvements in one sector often require removingconstraints in another sector

Bangladesh: girls secondary schooling and ruralelectrification contributed to reductions in childmortality

Vietnam: trade liberalization and infrastructure

investments helped fuel agricultural growth thatreduced rural poverty

Poverty Reduction Strategies are designed to integrateactions for both physical and human capital. Asimplemented they need to put more emphasis oninfrastructure and rural development.


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3. Adapt to political andcapacity realities

Reforming public sector institutions requires broadpolitical support.

Bolivia and Yemen: Technocratic civil servicereforms couldnt overcome traditions of politicalpatronage

If broad support is lacking, an incremental approach canget results.

Senegal: Successful reforms in telecoms and waterbuilt on politically acceptable intermediate solutions.But planned reforms in power and urban transport

were too all-encompassing, and failed

Modernization and reform efforts must matchimplementation capacity.

Malawi: a health service pilot operation with modest

objectives has achieved more than an ambitiouspublic sector overhaul program


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Making global programs MoreEffective

Most have been donor-driven; thevoice of developing countries in theirestablishment and governance has so far

been limitedMost are advocacy/technical

assistance programs supportingnational public goods although global

public goods programs still command themajor share of expenditures

Global-country linkages have beenweak; incentives to foster such linkagesare insufficient

Donors need to develop a


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Donors need to develop astronger approach to support ofregional programs Regional programs are few in numberyet equally

successful (above 80%) in meeting their objectives assingle-country programs

A regional hydropower project in the Senegal River Basinhas succeeded in providing efficiently produced electricityfor Mali, Mauritania, and Senegal

Donors and countries have overlooked opportunities forregional cooperation in country development strategies

They need greater peripheral vision to address such issuesas water management, power, transport, and diseasecontrol.

Successful support of regional programs requiresattention to three key issues

The achievement of equitably apportioned costs andbenefits among all countries

Reliance for program coordination on broad regional

institutions vs customized arrangements for specific topics Accommodation of the need for performance-based aid


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4. Combine short- and long-term objectives

Need long term engagement to get results

Cambodia: IDA projects helped build the HealthMinistry from weak bystander to effectiveimplementer of AIDS control programs.

Reform requires consensus-building. Combiningshort-term outputs with a long-term reformprogram helps deliver results

Ghana: IDA Support for education combinedpolicy reforms with funding for schoolbuildings and teaching materials over 15years. Physical improvements helped buildsupport for difficult systemic reforms.


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III. Strengthening Public SectorAccountability

Efforts to strengthen the accountability of publicsector institutions have led to better governmentprocesses in some countries, but they have not yetresulted in improvements in the perceived qualityof governance.

35 Countries with Bank Assistance for Public SectorReform

Government Process Quality GovernancePerception

Notes: Quality of Government Process Indicators: CPIA for budget and financial management, and for public administration 1999-2005.Governance Indicators are Kaufmann, Kraay, Mastruzzi Indicators for 1996-2004.Sample includes all countries for which IEG carried out a CAE or CASCRR in FY03-06, where the Bank provided support for public sector and governance reforms and for which CPIA and KKM indicatorswere available.Source: ARDE 2006

22

22

22

2

2

2222

2

2

2

2

22

22

22

22

22

22

G o v e r n m e n t

Ef f ec t i veness

C o n t ro l o f

C o r r u p t i o n

R e g u l a to r y Q u a li ty R u l e o f l a w

NumberofCountries

De t e r io ra t io n Im p ro ve m e nt No C han ge

22

2

2

2

2

2

2

22

22

22

Qual i ty o f Budgetary and Financia l

M a n a g e m e n t

Qual i ty o f Pub l i c A dminst ra t ion

NumberofCountries

De t e r io ra t io n Im p ro ve m e n t No C ha n ge

Governance Reforms Need


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Governance Reforms NeedPolitical Backing To DeliverResults

Three factors attenuated theeffectiveness of governance reformsthrough large-scale administrativereforms:

1.Reform initiatives have not always beenaligned with political realities:

Civil service reform in Bulgariadelivered results because it hadstrong political backing (prospects ofEU accession), but civil service

reforms in Yemen and Bolivia

Three Factors Attenuated


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Three Factors AttenuatedEffectiveness Of GovernanceReforms

2.The focus has been on adoption oflegislation and establishment ofinstitutions, but enforcement

capacity has received insufficientattention.

Anticorruption agencies, forexample, have only limited impactwhen they and their staff are notfully independent of those whosebehavior they monitor.

Three Factors Attenuated


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Three Factors AttenuatedEffectiveness Of GovernanceReforms

3.Governance reforms have tended toinsufficiently address the intersectionbetween the public sector and private

sector, even though regulatory reformshave often been effective againstcorruption.

Establishment of an independentregulator for electricity in Turkeyenabled direct contracting betweenbuyers and sellers of electricity andsharply limited opportunities for kick-

There Is Improvement In The


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There Is Improvement In TheTransparency Of GovernmentProcesses

Budget transparency: Turkey brought extra-budgetary funds that

undermined fiscal discipline into the budget,subjecting them to budget and parliamentaryscrutiny.

Public expenditure tracking surveys in Ugandadrastically increased the share of spending thatactually reaches schools.

Public procurement:

Civil society representatives observe publictendering in the Philippines.

Uganda posts results of procurement audits,contract awards etc. on the web.

Customs administration: The South East European Trade and Transport

Implications Basing Go ernance


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Implications: Basing GovernanceReforms On A Realistic AssessmentOf The Political Economy

Reforms to improve the accountabilityof public sector institutions requirebroad-based political support.

When such support is absent, anincremental approach that allowsmomentum for reforms to build canhelp achieve results.

Governance Reforms Need A


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Governance Reforms Need ARealistic Assessment Of ThePolitical Economy

Thorough exploitation of sector-specificopportunities to improve governancebrings results, even when anti-corruption is not the primary objective.

Reforms can be enhanced with effortsto foster local demand for accountabilitythrough increased transparency of

government processes and resourceutilization.


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IV. Aid flows are not reachingscaling up commitments

Source: OECD/DAC Database on Aid Activities

Real ODA, -22222222(Adjusted for inflation and exchange rate changes)

2

22

22

22

22

222

222

2222 2222 2222 2222 2222 2222 2222 2222 *2222

BillionUS$(Cons

tant

.222

.222

.222

.222

.222

.222

.222

.222

.222

%

ofG

Africa, exc. debt relief Other regions, exc. debt relief Debt relief ODA / GNI

Note: * Regional breakdown not yet available for 2006.


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Aid flows are not reaching scalingup commitments


Number of Donors per Recipient Country

%2

%22

%22

%22

%22

%222

s2222 s2222 s2222 s2222 s2222

Decade

%o

fRecipientCountries

Over22

to22 22

Less than 2



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Summing up

Independent Evaluation finds thatdevelopment effectiveness improveswhen it:

Focuses on the nature of growth Integrates activities across sectors and

sustains them over time

Supports and fosters a good policy

framework in each country Recognizes each countrys political and

capacity realities and builds on deepcountry knowledge

Aid volumes and fragmentation: source of


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ARDE 2006 Website

http://www.worldbank.org/ieg/arde2006

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