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World Bank policy lending and the quality of public sector governance (Inglês)

This study investigates the impact of World Bank development policy lending for public sector governance on the quality of public sector management and institutions. The World Bank’s Country Policy and Institutional Assessments (CPIA) are used to measure the latter, the study considers only policy conditions targeted at improvements in those areas. The analysis uses a comprehensive country-year panel data set of aid receiving-countries and finds a significant and inverse U-shaped effect of public sector conditions on the quality of public sector governance. For most observed values in the data, the impact is positive, but it turns negative beyond a value of 80 conditions. At that point, the predicted CPIA score is about 0.25 point (0.3 standard deviation) higher than with zero conditions. For most observations, the number of cumulative conditions is below 80, so the estimated effect of more conditions is generally positive. The analysis corrects for potential endogeneity and shows that the results are robust to sample restrictions, the use of an alternative governance measure, and the inclusion of an extended set of control variables. Falsification tests are also consistent with a causal interpretation from conditions to quality of public sector governance. The paper shows that conditions related to public financial management and tax reforms are more effective than those related to anti-corruption or civil service and administrative reform, where progress requires changing the behavior of a larger set of “deconcentrated” actors. The paper concludes by describing some innovative ideas in the Bank’s ambitious new public sector management strategy that could improve the effectiveness of its support for public sector governance reform.


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    Smets,Lodewijk, Knack,Stephen

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    Documento de trabalho sobre pesquisa de políticas

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    Regiões Mundiais,

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  • Nome do documento

    World Bank policy lending and the quality of public sector governance

  • Palavras-chave

    quality of public;Administrative and Civil Service Reform;Public Sector Governance;quality of governance;access to information law;Tax Policy and Administration;public sector reform;Public Sector Governance Issues;public sector wage bill;public sector management strategy;Index of Economic Freedom;Development Policy Loan;Rule of Law;Public Services;senior civil service;incentives for governments;incentive compatibility constraint;level of governance;Development Impact Evaluation;measure of democracy;human resource management;instrumental variable estimation;increasing tax revenue;per capita income;political business cycle;correlation between aid;Development Policy Lending;impact of aid;balance of payment;Public Financial Management;demands for information;development research group;control of corruption;public sector performance;corruption in government;public sector institution;implementation of reform;pattern of thought;standard deviation;political freedom;independent variable;political right;Economic Policy;urban agricultural policy;budgetary management;test statistic;selection bias;adjustment lending;donor support;governance measure;political variable;social policies;panel data;standard error;public policy;electoral competition;descriptive statistic;social policy;debt crisis;global economy;contract enforcement;good governance;support policy;recipient countries;empirical literature;tax collection;public expenditure;Macroeconomic Policy;government working;endogenous variable;moment condition;investment loan;Political Economy;receiving countries;proportional representation;government regulation;electoral system;cross-country regression;policy outcome;bureaucratic quality;estimation method;Tax Administration;tax system;african society;industry growth;portfolio level;idiosyncratic error;error-correction model;dynamic relationship;cross-country data;higher allocations;government behavior;primary sector;arithmetic mean;behavioral economics;employment equation;diagnostic instrument;vested interests;analytical tool;procurement reform;mental model;internal accountability;functioning state;tie in;improve risk;school autonomy;anticorruption commission;complementary policies;model estimation;tax condition;mutual trust;positive shock;measurement tool;explicit knowledge;aggregate measure;colonial heritage;empirical evidence;adjustment operation;property right;problem-solving approach;cross-section data;freedom from;sample selection;democratic regime;economic institution;linear model;Tax Reform;economic stabilization;combating corruption;alternative measure;legal tradition;cultural norm;ceteris paribus;population size;empirical findings;ethnic fractionalization;agricultural productivity;political party;empirical study;measurement error;assessment procedure;political control;binding constraint;political capital;government revenue;regulatory quality;government fund;aid-dependent countries;budget support;investment lending;estimate impact;political parties;controlling corruption;Macroeconomic Stability;development operation;cabinet approval;important component;open access;civil society;international community;positive relationship;test score;political constraint;negative relationship;governance problem;blunt instrument;stringent conditionality;Budget Management;point estimate;visual inspection;economic reform;adverse consequence;monitoring indicator;economic study;exponential distribution;empirical support;Economic Studies;



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