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Inside the World Bank's Black Box allocation system: how well Does IDA allocate resources to the neediest and most vulnerable countries?

Assessing International Development Association allocation decisions

Authors: B. Leo (ed); Center for Global Development
Publisher: Center for Global Development, USA, 2010

Full text of document

Several donors have pressed for reforms to increase the share of International Development Association (IDA) resources provided to the neediest and most vulnerable countries during the last few IDA negotiations. The proposed reforms vary but the philosophical thrust of focusing further down the development chain is the same. This paper explores how well IDA’s existing performance-based allocation (PBA) system actually addresses the issues. To achieve this it examines how IDA allocations are distributed at each successive stage of the PBA methodology based upon a number of need and vulnerability measures.

 

 

The paper utilises proxies broadly categorised as: access to core public services; income and absolute poverty prevalence; and development assistance volumes. It breaks the categories down as follows:

 

  • Millennium Development Goal (MDG) Progress Index – compares countries' performance against required achievement trajectories for eight core MDG target indicators. The index determines whether a country is above or below that MDG indicator achievement trajectory.

     

  • UN Human Development Index – captures a country’s social well-being by population health and longevity, education and knowledge and standard of living.

     

  • Absolute Poverty Prevalence – the percentage of the population living on less than US$1.25 a day.

     

  • Aid Volumes – the level of total donor support provides information on whether the prospective beneficiaries of the proposed PBA reforms receive donor assistance or are lacking thereof.

     

  • Income per Capita – the Gross National Income (GNI) per capita as a separate proxy for development needs.

     

  • Economic Vulnerability Measures – exogenous shock measures as proxies for economic vulnerability.

     

  • Conflict Prevalence – countries that have spent the most time in conflict over thelast 20 years receive over 70 percent of all available IDA resources.

     

  • Natural Disasters – countries with the greatest vulnerability to natural disasters receive 23 percent of available IDA resources.

     

The paper makes the following observations:


  • Of the measures examined, only the MDG Progress Index and GNI per capita illustrate parity between final allocations to the bottom and top quartile of countries.

     

  • Per-capita allocations to the neediest and most vulnerable countries more than doubles between the baseline and final PBA scenarios for every need and vulnerability indicator examined.

     

  • The existing system has several built-in biases to redistribute resources to these countries although the exceptions fall short of ensuring full parity as would be wished by some.

     

The paper concludes that the philosophical debate among key IDA donors likely will continue for the foreseeable future.