Smets, LodewijkKnack, StephenMolenaers, Nadia2012-12-072012-12-072012-07https://hdl.handle.net/10986/11949This 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.en-USCC BY 3.0 IGOACCOUNTABILITYADJUSTMENTAGRICULTUREBALANCE OF PAYMENTSBANK DEBTBANK POLICYBANK SUPERVISIONBORROWERBORROWINGCOMMITMENTCOMMITMENTSCOMPARATIVE ECONOMICSCONDITIONALITYCREDIBILITYDEBTDEBT REDUCTIONDECISION MAKINGDEMOCRACYDEREGULATIONDEVELOPING COUNTRIESDEVELOPMENT ASSISTANCEDEVELOPMENT BANKDEVELOPMENT BANKSDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDISBURSEMENTSDISCOUNT RATEECONOMIC ADJUSTMENTECONOMIC DEVELOPMENTECONOMIC OUTCOMESECONOMIC PERFORMANCEECONOMIC POLICYECONOMIC REFORMECONOMIC SECTORSENDOGENOUS VARIABLESEQUATIONSFINANCIAL INSTITUTIONSFINANCIAL SECTORFISCAL DEFICITFISCAL REFORMFOREIGN AIDGDPGDP PER CAPITAGOVERNMENT CAPACITYGOVERNMENT INTERVENTIONSGOVERNMENT OFFICIALSGOVERNMENT OWNERSHIPGROWTH RATEHUMAN DEVELOPMENTIDA CREDITSINCOME GROWTHINCOME TAXINFLATIONINFLATION RATEINFORMATIONAL ASYMMETRIESINTERNATIONAL BANKINTERNATIONAL DEVELOPMENTINTERNATIONAL ECONOMICSINVESTIGATIONINVESTINGINVESTMENT PROJECTSLEADERSHIPLENDING DECISIONSLENDING INSTRUMENTLENDING VOLUMELEVYLOANLOAN AGREEMENTLOAN AGREEMENTSLOAN AMOUNTLOAN COVENANTSLOAN DISBURSEMENTSLOAN QUALITYLOAN SIZELOAN SUPERVISIONLOANS TO COUNTRIESMACROECONOMIC CONDITIONSMACROECONOMIC MANAGEMENTMACROECONOMIC POLICYMACROECONOMICSMARKET REFORMMARKET REFORMSMARXISMMAXIMUM LIKELIHOOD ESTIMATIONMINISTERMOBILE PHONEMONETARY POLICYMONOPOLYNATURAL DISASTERSPERSONAL INCOMEPOLITICAL ECONOMYPOLITICAL LEADERSPOSITIVE COEFFICIENTPRIVATIZATIONPRODUCT MARKETSPUBLIC SERVICESREGIONAL DEVELOPMENT BANKSREGIONAL DUMMIESRETURNSRULING PARTYSTRUCTURAL ADJUSTMENTSUBVENTIONSTAXTAX REFORMTAXATIONTELECOMMUNICATIONSTRADE BARRIERSTRADE POLICYTRANCHETRANCHESTRANSPORTURBAN DEVELOPMENTUTILITY FUNCTIONUTILITY MAXIMIZATIONVALUE ADDEDVOTERSWORLD BANK LENDINGWORLD BANK LOANWorld Bank10.1596/1813-9450-6130