Indian Council for Research on International Economic Relations

Lecture Details

The World Bank of the Future: Making Aid Work
 

Prof. Abhijit Banerjee, Professor of Economics, Massachusetts Institute of Technology, Boston, 
November 17, 2003

 
Prof. Abhijit Banerjee, Professor of Economics, Massachusetts Institute of Technology, Boston (centre), delivering a lecture on ‘The World Bank of the Future: Making Aid Work’, jointly organised with South Asia Network of research Economic research Institutes (SANEI). 

Prof. Abhijit Banerjee, Professor of Economics, Massachusetts Institute of Technology, delivered a lecture on ‘The World Bank of the Future: Making Aid Work’ on November 17, 2003. The lecture was jointly organised by ICRIER and the South Asian Network of Economic research Institutes (SANEI) and was held at the India Habitat Centre, New Delhi. Drawing on data for the World Bank and the Asian Development Bank (ADB) for the period 1987-2001, Prof. Banerjee examined whether foreign aid is being spent effectively by evaluating project and sector level data for the World Bank, Asian Development Bank (ADB), and other public donor organisations. He pointed out that sectors of the economy get more money from the World Bank (and perhaps the ADB) when they are improving faster. Controlling for the rate of improvement, sectors get more money from the Bank (and may be the ADB) when they are performing worse. Prof. Banerjee stated that the correlation of the share of money from the World Bank in a given project to the project’s eventual performance is either negative or zero depending on whether we focus on the expected share of funding or the actual share, while for the ADB there is no solid evidence of any correlation. Prof. Banerjee pointed out that lack of a scientific basis for decision making and scepticism about the feasibility of evidence based decision making limits donor effectiveness. He emphasised that the multilateral donor institutions need to rely more on measurable evidence available to test a particular project’s efficacy. Dr. Arvind Virmani, Director & Chief Executive, ICRIER, chaired the lecture.

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