Governance and Returns on Investment: An Empirical Investigation

Abstract

No AccessPolicy Research Working Papers25 Jun 2013Governance and Returns on Investment: An Empirical InvestigationAuthors/Editors: Jonathan Isham, Daniel KaufmannJonathan Isham, Daniel Kaufmannhttps://doi.org/10.1596/1813-9450-1550SectionsAboutPDF (1.8 MB) ToolsAdd to favoritesDownload CitationsTrack Citations ShareFacebookTwitterLinked In Abstract:November 1995 There is a strong statistical link between a country's civil liberties and the performance of its aid-financed govern-ment investment projects. But type of political regime (whether authoritarian or democratic) and the status of more purely political liberties do not appear to significantly affect project performance. Using data from the World Bank's Operations Evaluation Department, Isham, Kaufmann, and Pritchett examine the link between the performance of Bank-financed projects and various indicators of country governance. They find that: ° There is a strong statistical, and possibly causal, link between civil liberties and project performance. After controlling for a variety of determinants of project performance, they find that in countries with the best civil liberties records projects have an economic rate of return between 8 and 22 percentage points higher than the rate of return in countries with the worst civil liberties. (The average rate of return in the sample is 16 percent.) ° The type of political regime (whether authoritarian or democratic) and the status of more purely political liberties do not appear to significantly affect project performance. This paper --- a product of the Poverty and Human Resources Division, Policy Research Department --- is part of a larger effort in the department to understand the donor and country determinants of aid effectiveness. The study was funded by the Bank's Research Support Budget under the research project Bank Project Effectiveness and Country Policy Environment (RPO 679-49). Previous bookNext book FiguresReferencesRecommendedDetailsCited ByAid Effectiveness and the Millennium Development GoalsSSRN Electronic JournalFrom Pushing Reforms to Pulling Reforms: The Role of Challenge Programs in Foreign Aid PolicySSRN Electronic JournalEffective Foreign Aid, Economic Integration And Subsidiarity: Lessons from EuropeSSRN Electronic JournalA Primer on Foreign AidSSRN Electronic JournalFrom Pushing Reforms to Pulling Reforms: Role of Challenge Programs in Foreign Aid PolicySSRN Electronic JournalEducation, Trade Reform and Investment ReturnsSSRN Electronic Journal View Published: November 1999 Copyright & Permissions Related RegionsAfricaEast Asia & PacificLatin America & CaribbeanRelated CountriesCzech RepublicRelated TopicsGovernance KeywordsACCOUNTABILITYAID EFFECTIVENESSBAD GOVERNANCECIVIL LIBERTIESDEMOCRACYECONOMIC DEVELOPMENTECONOMIC PERFORMANCEGOOD GOVERNANCEGOVERNANCEGOVERNANCE INDICATORSGOVERNANCE VARIABLESGROWTHHUMAN RIGHTSINDICATORSINTERNATIONAL DEVELOPMENTMEASUREMENTMEASUREMENT ERRORPOLITICSPOVERTYSERVICE PDF DownloadLoading ...