Publication: Political Ideology, Quality at Entry and the Success of Economic Reform Programs
Date
2012-07
ISSN
Published
2012-07
Author(s)
Smets, Lodewijk
Knack, Stephen
Molenaers, Nadia
Abstract
This study investigates how government
ideology matters for the success of World Bank economic
policy loans, which typically support market-liberalizing
reforms. A simple model predicts that World Bank staff will
invest more effort in designing an economic policy loan when
faced with a left-wing government. Empirically, estimates
from a Heckman selection model show that the quality at
entry of an economic policy loan is significantly higher for
governments with a left-wing party orientation. This result
is robust to changes in the sample, alternative measures of
ideology, different estimation techniques and the inclusion
of additional control variables. Next, robust findings from
estimating a recursive triangular system of equations
indicate that leftist governments comply more fully with
loan agreements. Results also suggest that World Bank
resources are more productive -- in terms of reform success
-- in the design of policy operations than in their
supervision. Anecdotal evidence from several country cases
is consistent with the finding that left-wing governments
receive higher quality loans.
Citation
“Smets, Lodewijk; Knack, Stephen; Molenaers, Nadia. 2012. Political Ideology, Quality at Entry and the Success of Economic Reform Programs. Policy Research Working Paper; No. 6130. © World Bank, Washington, DC. http://openknowledge.worldbank.org/handle/10986/11949 License: CC BY 3.0 IGO.”
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