Skip to main content

International Institutions and Political Liberalization: Evidence from the World Bank Loans Program

  • Allison Carnegie and Cyrus Samii

How do international institutions affect political liberalization in member states? Motivated by an examination of the World Bank loans program, this article shows that institutions can incentivize liberalization by offering opportunities for countries to become associated with advanced, wealthy members. In the World Bank, when a loan recipient reaches a specified level of economic development, it becomes eligible to graduate from borrower status to lender status. Using a regression discontinuity design, the study demonstrates that this incentive motivates states to improve their domestic behavior with respect to human rights and democracy. Combining qualitative and quantitative evidence, the results suggest that the desire to become a member of this elite group is responsible for motivating member states to reform due to the belief that such membership brings diffuse international and domestic benefits.

Hide All

Department of Political Science, Columbia University (email:; Department of Politics, New York University (email: Authors are listed in alphabetical order. This version contains updates to the data over previous drafts. We thank Eric Arias, Raj Desai, Lindsay Dolan, Jeff Hammer, Susan Hyde, Joan Ricart-Huguet, Shanker Satyanath, Kenneth Scheve, Johannes Urpelainen, Matt Winters, the participants of seminars at Yale University, Cornell University and Princeton University, and the participants of the APSA Conference and the PEIO Conference for helpful comments. Special thanks to Peter Aronow for especially generous feedback. We also thank the World Bank Development Data Group for providing archival data. All remaining errors are our own. Data replication sets are available in Harvard Dataverse at: and online appendices are available at

Hide All
Abdelal, Rawi, Herrera, Yoshiko M., Johnston, Alastair Iain, and McDermott, Rose. 2009. Measuring Identity. New York and Cambridge: Cambridge University Press.
Acharya, Amitav, and Johnston, Alastair Iain. 2007. Crafting Cooperation: Regional International Institutions in Comparative Perspective. New York and Cambridge: Cambridge University Press.
Asian Development Bank. 1998. A Graduation Policy for the Bank’s DMCs. Manila: Asian Development Bank.
Babb, Sarah. 2009. Behind the Development Banks: Washington Politics, World Poverty, and the Wealth of Nations. Chicago, IL: University of Chicago Press.
Baccini, Leonardo, and Urpelainen, Johannes. 2014. International Institutions and Domestic Politics: Can Preferential Trading Agreements Help Leaders Promote Economic Reform? The Journal of Politics 76 (1):195214.
Beaulieu, E., Cox, G.W., and Saiegh, S.M.. 2013. Sovereign Debt and Regime Type: Re-considering the Democratic Advantage. International Organization 66 (4):709738.
Broz, J. Lawrence. 2002. Political System Transparency and Monetary Commitment Regimes. International Organization 56 (4):861887.
By, Eduardo L. 1995. South Korea Sets End to Borrowing From World Bank. Wall Street Journal, 3 March.
Carapico, Sheila. 2002. Foreign Aid for Promoting Democracy in the Arab World. The Middle East Journal 56 (3):379395.
Carnegie, Allison. 2015. Power Plays: How International Institutions Reshape Coercive Diplomacy. New York and Cambridge: Cambridge University Press.
Carnegie, Allison, and Carson, Austin. 2017. The Spotlight’s Harsh Glare: Rethinking Publicity and International Order. International Organization. Forthcoming.
Carnegie, Allison, and Marinov, Nikolay. 2017. Foreign Aid, Human Rights, and Democracy Promotion: Evidence from a Natural Experiment. American Journal of Political Science. doi: 10.1111/ajps.12289.
Carnegie, Allison, and Mikulachek, Christoph. 2017. The Promise of Peacekeeping: Protecting Civilians in Civil Wars. Working manuscript.
Cattaneo, Matias D., Frandsen, Brigham, and Titiunik, Rocio. 2013. Randomization Inference in the Regression Discontinuity Design: An Application to the Study of Party Advantages in the U.S. Senate. Ann Arbor: University of Michigan.
Chetty, Raj. 2012. Bounds on Elasticities with Optimization Frictions: A Synthesis of Micro and Macro Evidence on Labor Supply. Econometrica 80 (3):9691018.
Clegg, Liam. 2013. Controlling the World Bank and IMF: Shareholders, Stakeholders, and the Politics of Concessional Lending. Berlin: Springer.
Coate, Stephen, and Morris, Stephen. 2004. Policy Conditionality. In Globalization and the Nation State: The Impact of the IMF and the World Bank , edited by Gustav Ranis, James Raymond Vreeland and Stephen Kosack, 3650. London and New York: Routledge
Dafoe, Allan, and Caughey, Devin. 2016. Honor and War: Southern US Presidents and the Effects of Concern for Reputation. World Politics 68 (2):341381.
Dafoe, Allan, Renshon, Jonathan, and Huth, Paul. 2014. Reputation and Status as Motives for War. Annual Review of Political Science 17:371393.
Dai, Xinyuan. 2007. International Institutions and National Policies. New York and Cambridge: Cambridge University Press.
Davis, Christina L. 2006. Do WTO Rules Create a Level Playing Field? Lessons from the Experience of Peru and Vietnam. In Negotiating Trade: Developing Countries in the WTO and NAFTA, edited by John S. Odell, 219256. New York and Cambridge: Cambridge University Press.
Davis, Christina. 2014. Membership Conditionality and Institutional Reform: The Case of the OECD. Working Paper. Princeton, NJ: Princeton University.
Davis, Christina, and Wilf, Meredith. 2011. Joining the Club: Accession to the GATT/WTO. Paper presented at the Annual Meeting of the American Political Science Association, Seattle, WA, 1–4 September.
Dollar, David R. 1998. Assessing Aid: What Works, What Doesn’t, and Why . Oxford: Oxford University Press.
Dollar, David, and Svensson, Jakob. 2000. What Explains the Success or Failure of Structural Adjustment Programmes? The Economic Journal 110 (466):894917.
Dreher, Axel. 2006. IMF and Economic Growth: The Effects of Programs, Loans, and Compliance with Conditionality. World Development 34 (5):769788.
Dreher, Axel, Sturm, Jan-Egbert, and Vreeland, James Raymond. 2009. Development Aid and International Politics: Does Membership on the UN Security Council Influence World Bank Decisions? Journal of Development Economics 88 (1):118.
Drezner, Daniel W. 2008. All Politics is Global. New York and Cambridge: Cambridge University Press.
Etzioni, Amitai. 1962. International Prestige, Competition and Peaceful Coexistence. Archives Européennes de Sociologie 3 (1):2141.
Evrensel, Ayse Y. 2004. Conditionality and Effectiveness of IMF Programs in Emerging Economies. Emerging Markets Finance and Trade 40 (3):39.
Fang, Songying. 2008. The Informational Role of International Institutions and Domestic Politics. American Journal of Political Science 52 (2):304321.
Fearon, James D. 1994. Domestic Political Audiences and the Escalation of International Disputes. American Political Science Review 88 (3):577592.
Freedom House. 2014. Freedom in the World. New York: Freedom House Inc.
Gray, Julia. 2009. International Organization as a Seal of Approval: European Union Accession and Investor Risk. American Journal of Political Science 53 (4):931949.
Gray, Julia. 2013. The Company States Keep. Cambridge: Cambridge University Press.
Guilhot, Nicolas. 2005. The Democracy Makers: Human Rights and International Order. New York: Columbia University Press.
Guillaumont, Patrick. 2009. Caught in a Trap. Identifying the Least Developed Countries. Paris: Economica.
Hadenius, Axel, and Teorell, Jan. 2005. Assessing Alternative Indices of Democracy. Working Paper Series 6, IPSA Committee on Concepts and Methods, Mexico City.
Hafner-Burton, Emilie M., and Montgomery, Alexander H.. 2006. Power Positions International Organizations, Social Networks, and Conflict. Journal of Conflict Resolution 50 (1):327.
Hafner-Burton, Emilie M., Mansfield, Edward D., and Pevehouse, Jon C. W.. 2013. Human Rights Institutions, Sovereignty Costs and Democratization. British Journal of Political Science 45 (1):127.
Handley, K., and Limão, N.. 2012. Trade and Investment under Policy Uncertainty: Theory and Firm Evidence. Cambridge, MA: National Bureau of Economic Research.
Hellinger, Douglas. 1985. Overview of Foreign Assistance: Hearings before the Subcommittees. 102nd Congress, 1st Session 81.
Hill, Daniel W. 2010. Estimating the Effects of Human Rights Treaties on State Behavior. The Journal of Politics 72 (4):11611174.
Horkỳ, Ondřej, and Lightfoot., Simon 2012. From Aid Recipients to Aid Donors? Development Policies of Central and Eastern European States. Perspectives on European Politics and Society 13 (1):116.
Imbens, G., and Kalyanaraman, K.. 2009. Optimal Bandwidth Choice for the Regression Discontinuity Estimator. Cambridge, MA: National Bureau of Economic Research.
Imbens, G.W., and Lemieux, T.. 2008. Regression Discontinuity Designs: A Guide to Practice. Journal of Econometrics 142 (2):615635.
Imbens, Guido W., and Kolesar, Michael. 2012. Robust Standard Errors in Small Samples: Some Practical Advice. Cambridge, MA: National Bureau of Economic Research.
Jensen, N. M. 2006. Nation-states and the Multinational Corporation: A Political Economy of Foreign Direct Investment. Princeton, NJ: Princeton University Press.
Jerven, Morten. 2013. Poor Numbers: How We Are Misled by African Development Statistics and What to Do about It. Ithaca, NY: Cornell University Press.
Kaldor, Mary, and Vejvoda, Ivan. 2002. Democratization in Central and Eastern Europe. Continuum International Publishing Group.
Kapur, Devesh, Lewis, John Prior, and Webb, Richard C.. 1997. The World Bank: its First Half Century. Washington, DC: Brookings Institution Press.
Kelley, Judith. 2004. International Actors on the Domestic Scene: Membership Conditionality and Socialization by International Institutions. International Organization 58 (3):425458.
Keohane, Robert O. 1984. After Hegemony: Cooperation and Discord in the World Political Economy. Princeton, NJ: Princeton University Press.
Kerner, Andrew, and Beatty, Alison. 2014. Real Money, Fake Data: The Political Economy of World Bank Data Manipulation. Working Paper. Ann Arbor: University of Michigan Press.
KMS Baltics. 2007. Latvia Graduates from World Bank. KMS Baltics.
Knack, S., Rogers, F. H., and Heckelman, J. C.. 2012. Crossing the Threshold: A Positive Analysis of IBRD Graduation Policy. The Review of International Organizations 7 (2):145176.
Koremenos, Barbara, Lipson, Charles, Snidal, Duncan, and Kydd, Andrew. 2001. The Rational Design of International Institutions. International Organization 55 (4):761799.
Kulkarni, Shyam, and Winters, Matthew. 2014. The World Bank in the Post-Structural Adjustment Era. New York: Routledge.
Kuusik, Riina. 2006. The Estonian Foreign Policy Yearbook. The Estonian Foreign Policy Institute.
Lake, David A. 2013. Authority, Status, and the End of the American Century. In Status in World Politics, edited by T. V. Paul, Deborah Larson and William Wohlforth, 246272. New York and Cambridge: Cambridge University Press.
Lawson, Chappell H. 2002. Building the Fourth Estate: Democratization and the Rise of a Free Press in Mexico. Berkeley: University of California Press.
Lee, D., and Lemieux, T.. 2010. Regression Discontinuity Designs in Economics. Journal of Economic Literature 48:281355.
Levi, Margaret. 1989. Of Rule and Revenue. Berkeley: University of California Press.
Levi, Margaret. 2003. A State of Trust. In Trust and Governance, edited by Valerie Braithwaite and Margaret Levi, 77101. New York: Russell Sage Foundation.
Levitz, Philip, and Pop-Eleches, Grigore. 2010. Comparative Political Studies 43 (4):457485.
Lewis, Paul. 1995. World Markets; Is South Korea Poised to Rise Again? The New York Times, 12 March.
Li, Q., and Resnick, A.. 2003. Reversal of Fortunes: Democratic Institutions and Foreign Direct Investment Inflows to Developing Countries. International Organization 57 (1):175211.
Lupu, Yonatan. 2013. The Informative Power of Treaty Commitment: Using the Spatial Model to Address Selection Effects. American Journal of Political Science 57 (4):912925.
Maggi, G. 1999. The Role of Multilateral Institutions in International Trade Cooperation. The American Economic Review 89 (1):190214.
Marshall, Monty G., Gurr, Ted Robert, and Jaggers, Keith. 2012. Polity IV Project: Political Regime Characteristics and Transitions, 1800–2012. Center for Systemic Peace.
Martin, Lisa L. 2005. The President and International Commitments: Treaties as Signaling Devices. Presidential Studies Quarterly 35 (3):440465.
McCrary, Justin. 2008. Manipulation of the Running Variable the Regression Discontinuity Design: A Density Test. Journal of Econometrics 142:698714.
Morgan, Stephen L., and Winship, Christopher. 2007. Counterfactuals and Causal Inference: Methods and Principles for Social Research. New York: Cambridge University Press.
Nelson, Rebecca M. 2012. Multilateral Development Banks: Overview and Issues for Congress. Washington, DC: Congressional Research Service.
Neumayer, Eric. 2005. Do International Human Rights Treaties Improve Respect for Human Rights? Journal of Conflict Resolution 49 (6):925953.
New Europe . 2005. Czech Republic to move from borrower to lender status, 24 April. Available from
New Europe . 2006. Czechs Financially Fit to Help Others, 4 March. Available from, accessed 1 May 2015.
North, D. C., and Weingast, B. R.. 1989. Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-century England. Journal of Economic History 49 (4):803832.
Pemstein, Daniel, Meserve, Stephen A., and Melton, James. 2010. Democratic Compromise: A Latent Variable Analysis of Ten Measures of Regime Type. Political Analysis 18 (4):426449.
Poast, Paul, and Urpelainen, Johannes. 2013. Fit and Feasible: Why Democratizing States Form, not Join, International Organizations. International Studies Quarterly 57 (4):831841.
Przeworski, Adam, and Vreeland, James Raymond. 2000. The Effect of IMF Programs on Economic Growth. Journal of Development Economics 62 (2):385421.
Rastello, Sandrine. 2016. Is There Such Thing as Reliable GDP Data?. Bloomberg Business, 4 January.
Samii, Cyrus, and Allison, Carnegie. 2017. “International Institutions and Political Liberalization: Evidence from the World Bank Loans Program”, doi: 10.7910/DVN/ORDLXK, Harvard Dataverse, V1, UNF:6:J6s6NrKujlFtO7yFc4oKtA==.
Schimmelfennig, Frank. 2001. The Community Trap: Liberal Norms, Rhetorical Action, and the Eastern Enlargement of the European Union. International Organization 55 (1):4780.
Schneider, Christina J. 2009. Conflict, Negotiation and European Union Enlargement. New York and Cambridge: Cambridge University Press.
Schneider, Christina J., and Urpelainen, Johannes. 2012. Accession Rules for International Institutions A Legitimacy-Efficacy Trade-off? Journal of Conflict Resolution 56 (2):290312.
Schultz, K. A., and Weingast, B. R.. 2003. The Democratic Advantage: Institutional Foundations of Financial Power in International Competition. International Organization 57 (1):342.
Sekhon, Jasjeet. 2009. Opiates for the Matches. Annual Review of Political Science 12 (1):487508.
Shihata, Ibrahim F. I. 2000. The World Bank Legal Papers. Leiden: Martinus Nijhoff Publishers.
Simmons, Beth A., and Hopkins, Daniel J.. 2005. The Constraining Power of International Treaties: Theory and Methods. American Political Science Review 99 (4):623631.
Simmons, Beth A., Dobbin, Frank, and Garrett, Geoffrey. 2006. Introduction: The international Diffusion of Liberalism. International Organization 60 (4):781810.
Simmons, Beth A., and Martin, Lisa L.. 2002. International Organizations and Institutions. In Handbook of International Relations, edited by Walter Carlsnaes, Thomas Risse and Beth A. Simmons, 192211. Thousand Oaks, CA: Sage.
Slovak Spectator . 2008. Slovakia to Ask World Bank for Inclusion among Developed Economies, 10 April. Available from, accessed 28 July 2014.
Smets, Lodewijk, and Knack, Stephen. 2015. World Bank Policy Lending and the Quality of Public Sector Governance. Working Paper 7267. Washington, DC: World Bank.
Stasavage, D. 2008. Cities, Constitutions, and Sovereign Borrowing in Europe, 1274–1785. International Organization 61 (3):489525.
Stasavage, D.. 2011. States of Credit: Size, Power, and the Development of European Polities. Princeton, NJ: Princeton University Press.
Stone, Randall W. 2002. Lending Credibility: The International Monetary Fund and the Postcommunist Transition. Princeton, NJ: Princeton University Press.
Teorell, Jan, Samanni, Marcus, Holmberg, Soeren, and Rothstein, Bo. 2012. The Quality of Governance Standard Dataset, Version 6Apr11. University of Gothenburg: The Quality of Governance Institute.
Tomz, M. 2007. Reputation and International Cooperation: Sovereign Debt Across Three Centuries. Princeton, NJ: Princeton University Press.
Velinger, Van. 2006. World Bank Marks Czech Republic’s Graduation to ‘Developed’ Status. Radio Praha, 28 February.
Volgy, Thomas J., Corbetta, Renato, Grant, Keith A., and Baird, Ryan G.. 2010. Major Power Status in International Politics. Major Powers and the Quest for Status in International Politics; Global and Regional Perspectives, edited by Thomas J. Volgy, Renato Corbetta, Keith A. Grant and Ryan G. Baird. New York: Palgrave Macmillan.
Von Stein, Jana. 2005. Do Treaties Constrain or Screen? Selection Bias and Treaty Compliance. American Political Science Review 99 (4):611622.
Vreeland, James Raymond. 2003. The IMF and Economic Development. New York and Cambridge: Cambridge University Press.
World Bank Development Committee. 2006. Strengthening the World Bank’s Engagement with IBRD Partner Countries. Washington, DC: World Bank.
World Bank Group. 2000. Republic of Slovenia – Country Assistance Strategy Progress Report. Washington, DC: World Bank.
World Bank Group. 2012. International Bank for Reconstruction and Development. Available from, accessed 5 August 2013.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

British Journal of Political Science
  • ISSN: 0007-1234
  • EISSN: 1469-2112
  • URL: /core/journals/british-journal-of-political-science
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Type Description Title
Supplementary materials

Carnegie and Samii supplementary material

 PDF (263 KB)
263 KB


Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed