Hostname: page-component-7c8c6479df-8mjnm Total loading time: 0 Render date: 2024-03-29T07:17:29.830Z Has data issue: false hasContentIssue false

Which Donors, Which Funds? Bilateral Donors' Choice of Multilateral Funds at the World Bank

Published online by Cambridge University Press:  13 September 2017

Get access

Abstract

The rapid growth of trust funds at multilateral development organizations has been widely neglected in the academic literature. We examine sovereign donors' choices among various trust fund options and contend that the choice among the different trust funds involves a fundamental trade-off: larger funds provide donors with “burden-sharing” benefits, but each donor can better assert its individual preferences in a fund with fewer other donors. The theoretical considerations yield testable hypotheses on a range of factors affecting this fundamental trade-off, most notably the area of the trust fund's intervention and donor countries' competing domestic interests. A large-N analysis of participation decisions of OECD/DAC donors in trust funds over the past decade mostly corroborates these hypotheses. In particular, ex ante preference alignment among donors as well as indicators for global activities and fragile states aid are robust determinants of participation in (large) multi-donor funds. In contrast, a donor tends to prefer a single-donor fund in areas where its national interests dominate.

Type
Research Article
Copyright
Copyright © The IO Foundation 2017 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Abbott, Kenneth W., and Snidal, Duncan. 1998. Why States Act Through Formal International Organizations. Journal of Conflict Resolution 42 (1):332.CrossRefGoogle Scholar
Abbott, Kenneth W., and Snidal, Duncan. 2000. Hard and Soft Law in International Governance. International Organization 54 (3):421–56.CrossRefGoogle Scholar
Bank-Netherlands Partnership Program (BNPP). 2013. FY13 Annual Report on Portfolio Performance. Bank-Netherlands Partnership Program. Washington DC: World Bank.Google Scholar
Bantekas, Ilias. 2009. Trust Funds Under International Law: Trustee Obligations of the United Nations and International Development Banks. The Hague, Netherlands: T.M.C. Asser.Google Scholar
Barakat, Sultan. 2009. The Failed Promise of Multi-Donor Trust Funds: Aid Financing as an Impediment to Effective State-Building in Post-Conflict Contexts. Policy Studies 30 (2):107–26.CrossRefGoogle Scholar
Barakat, Sultan, Rzeszut, Kathryn, and Martin, Nick. 2012. What Is the Track Record of Multi-Donor Trust Funds in Improving Aid Effectiveness? An Assessment of the Available Evidence. London: EPPI-Centre, Social Science Research Unit, Institute of Education, University of London.Google Scholar
Bermeo, Sarah B. 2008. Foreign Aid, Foreign Policy, and Strategic Development . PhD diss., Princeton University.Google Scholar
Berthélemy, Jean-Claude. 2006. Bilateral Donors’ Interest vs. Recipients’ Development Motives in Aid Allocation: Do All Donors Behave the Same? Review of Development Economics 10 (2):179–94.Google Scholar
Blackwell, J. Lloyd. 2005. Estimation and Testing of Fixed-Effect Panel-Data Systems. The Stata Journal 5 (2):202207.Google Scholar
Bueno de Mesquita, Bruce, and Smith, Alistair. 2009. A Political Economy of Aid. International Organization 63 (2):309–40.Google Scholar
Carlsson, Jonna. 2007. Multilateral Development Cooperation in Perspective. Perspectives No. 6. Gothenburg, Sweden: Center for African Studies, Gothenburg University.Google Scholar
Copelovitch, Mark S., and Putnam, Tonya L.. 2014. Design in Context: Existing International Agreements and New Cooperation. International Organization 68 (2):471–93.Google Scholar
Dietrich, Simone. 2013. Bypass or Engage? Explaining Donor Delivery Tactics in Foreign Aid Allocation. International Studies Quarterly 57 (4):698712.Google Scholar
Dudley, Leonard, and Montmarquette, Claude. 1976. A Model of the Supply of Bilateral Foreign Aid. American Economic Review 66 (1):132–42.Google Scholar
Eichenauer, Vera Z., and Hug, Simon. 2015. The Politics of Special Purpose Trust Funds. Paper presented at the 8th Annual Conference on the Political Economy of International Organizations, February, Berlin.Google Scholar
Eichenauer, Vera Z., and Reinsberg, Bernhard. 2014. Multi-bi Aid: Tracking the Evolution of Earmarked Funding to International Development Organizations from 1990 to 2012 (Codebook). Working Paper 84. Zurich: Center for Comparative and International Studies, University of Zurich.Google Scholar
Eichenauer, Vera Z., and Reinsberg, Bernhard. 2017. What Determines Earmarked Funding to International Development Organizations? Evidence from the New Multi-bi Aid Data. Review of International Organizations 12 (2):171–97.CrossRefGoogle Scholar
Graham, Erin R. 2015. Money and Multilateralism: How Funding Rules Constitute IO Governance. International Theory 7 (1):162–94.Google Scholar
Graham, Erin R. 2016. The Institutional Design of Funding Rules at International Organizations: Explaining the Transformation in Financing the United Nations. European Journal of International Relations 23(2):365–90.CrossRefGoogle Scholar
Gray, Julia. 2015. Life, Death, or Coma? Bureaucracy, Trade, and the Vitality of International Economic Organizations. Unpublished manuscript, University of Pennsylvania, Philadelphia.Google Scholar
Guder, Leonie. 2009. Multi-donor Trust Funds: Instruments of First Choice for Post-Crisis Situations? Development Outreach 11 (1):36–8.CrossRefGoogle Scholar
Gutner, Tamar L. 2005. Explaining the Gaps Between Mandate and Performance: Agency Theory and World Bank Environmental Reform. Global Environmental Politics 5 (2):1037.Google Scholar
Heckman, James J. 1976. The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models. Annals of Economic and Social Measurement 5 (4):475–92.Google Scholar
Heimans, Jeremy. 2004. Multiactor Global Funds: New Tools to Address Urgent Global Problems. Research paper 2004/47. Helsinki, Finland: United Nations University World Institute for Development Economics Research.Google Scholar
IEG. 2011. Trust Fund Support for Development: An Evaluation of the World Bank's Trust Fund Portfolio. Washington DC: Independent Evaluation Group, World Bank.Google Scholar
Jupille, Joseph, Mattli, Walter, and Snidal, Duncan. 2013. Institutional Choice and Global Commerce. New York: Cambridge University Press.Google Scholar
Kahler, Miles. 1992. Multilateralism with Small and Large Numbers. International Organization 46 (3):681708.CrossRefGoogle Scholar
Kapur, Devesh. 2002. The Changing Anatomy of Governance of the World Bank. In Reinventing the World Bank, edited by Pincus, Jonathan R. and Winters, Jeffrey A., 5475. Ithaca, NY: Cornell University Press.Google Scholar
Knack, Stephen, Rogers, Halsey F., and Eubank, Nicolas. 2011. Aid Quality and Donor Rankings. World Development 39 (11):1907–17.Google Scholar
Koremenos, Barbara, Lipson, Charles, and Snidal, Duncan. 2001. The Rational Design of International Institutions. International Organization 55 (4):761–99.CrossRefGoogle Scholar
Lyne, Mona M., Nielson, Daniel L., and Tierney, Mike J.. 2009. Controlling Coalitions: Social Lending at the Multilateral Development Banks. Review of International Organizations 4 (4):407–33.CrossRefGoogle Scholar
Maizels, Alfred, and Nissanke, Machiko K.. 1984. Motivations for Aid to Developing Countries. World Development 12 (9):879900.Google Scholar
Mallaby, Sebastian. 2004. The World's Banker: A Story of Failed States, Financial Crises, and the Wealth and Poverty of Nation. New York: Penguin Press.Google Scholar
Mansfield, Edward D., and Reinhardt, Eric. 2003. Multilateral Determinants of Regionalism: The Effects of GATT/WTO on the Formation of Preferential Trading Arrangements. International Organization 57 (4):829–62.Google Scholar
Martin, Lisa L. 1992. Interests, Power, and Multilateralism. International Organization 46 (4):765–92.Google Scholar
McDowell, Allen. 2004. From the Help Desk: Seemingly Unrelated Regression with Unbalanced Equations. The Stata Journal 4 (4):442–48.Google Scholar
Michaelowa, Axel, and Michaelowa, Katharina. 2011. Climate Business for Poverty Reduction? The Role of the World Bank. Review of International Organizations 6 (3):259–86.Google Scholar
Michaelowa, Katharina, Reinsberg, Bernhard, and Schneider, Christina J.. 2016. Multi-bi Aid in European Development Assistance: The Role of Capacity Constraints and Member State Politics. Development Policy Review 35(4):513–30.CrossRefGoogle Scholar
Milner, Helen V., and Tingley, Dustin. 2013. The Choice for Multilateralism: Foreign Aid and American Foreign Policy. Review of International Organizations 8 (3):313–41.CrossRefGoogle Scholar
Morse, Julia C., and Keohane, Robert O.. 2014. Contested Multilateralism. Review of International Organizations 9 (4):385412.Google Scholar
Müller, Benito, and Winkler, Harald. 2008. One Step Forward, Two Steps Back? The Governance of the World Bank Climate Investment Funds. Oxford Institute for Energy Studies Comment, February.Google Scholar
Organisation for Economic Co-operation and Development (OECD). 2011. 2011 DAC Report on Multilateral Aid. DCD/DAC(2011)21/FINAL. Paris: Organisation for Economic Co-operation and Development.Google Scholar
Organisation for Economic Co-operation and Development (OECD). 2014a. OECD.StatExtracts: General Statistics. Paris: Organisation for Economic Cooperation and Development. Available at <http://stats.oecd.org>. Accessed 12 February 2014..+Accessed+12+February+2014.>Google Scholar
Organisation for Economic Co-operation and Development (OECD). 2014b. OECD.StatExtracts: Development. Paris: Organisation for Economic Cooperation and Development. Available at <http://stats.oecd.org>. Accessed 12 February 2014..+Accessed+12+February+2014.>Google Scholar
Olson, Mancur. 1965. The Problem of Collective Action. Public Goods and the Theory of Groups. Cambridge, MA: Harvard University Press.Google Scholar
Panneels, Kris, and Beringhs, Guy. 2005. Towards a Redesign of the UN Development Architecture. Discussion paper DCD/DAC/RD(2005)17/RD6. Paris: Organisation for Economic Co-operation and Development.Google Scholar
Reinsberg, Bernhard. 2016. The Implications of Multi-bi Financing on Multilateral Agencies: The Example of the World Bank. In The Fragmentation of Aid: Concepts, Measurements and Implications for Development Cooperation, edited by Klingebiel, Stephan, Mahn, Timo, and Negre, Mario, 185–98. London: Palgrave McMillan.Google Scholar
Reinsberg, Bernhard. 2017. Organizational Reform and the Rise of Trust Funds: Lessons from the World Bank. Review of International Organizations 12 (2):199226.CrossRefGoogle Scholar
Reinsberg, Bernhard, Michaelowa, Katharina, and Eichenauer, Vera Z.. 2015. The Rise of Multi-bi Aid and the Proliferation of Trust Funds. In Handbook on the Economics of Foreign Aid, edited by Arvin, B. Mak and Lew, Byron, 527–54. Northhampton, UK: Edward Elgar.Google Scholar
Rixen, Thomas, and Rohlfing, Ingo. 2007. The Institutional Choice of Bilateralism and Multilateralism in International Trade and Taxation. International Negotiation 12 (3):389414.Google Scholar
Rodrik, Dani. 1995. Why Is There Multilateral Lending? Working paper 5160. Cambridge, MA: National Bureau of Economic Research.Google Scholar
Schneider, Christina J., and Tobin, Jennifer L.. 2016. Portfolio Similarity and International Development Aid. International Studies Quarterly 60 (4):647–64.Google Scholar
Sridhar, Devi, and Woods, Ngaire. 2013. Trojan Multilateralism: Global Cooperation in Health. Global Policy 4 (4):325–35.CrossRefGoogle Scholar
Thompson, Alexander, and Verdier, Daniel. 2013. Multilateralism, Bilateralism, and Regime Design. International Studies Quarterly 58 (1):1528.Google Scholar
Tortora, Piera, and Steensen, Suzanne. 2014. Making Earmarked Funding More Effective: Current Practices and a Way Forward. Report no. 1. Paris: OECD Development Co-operation Directorate.Google Scholar
Weaver, Catherine. 2008. Hypocrisy Trap: The World Bank and the Poverty of Reform. Princeton, NJ: Princeton University Press.Google Scholar
World Bank. 2005. 2004 Trust Funds Annual Report. Concessional Finance and Global Partnerships Vice Presidency. Washington, DC: World Bank.Google Scholar
World Bank. 2012a. Trust Funds Handbook. Digital ed., revised version, Concessional Finance and Global Partnerships. Version 29 June 2012. Washington, DC: World Bank.Google Scholar
World Bank. 2012b. Directory of Programs Supported by Trust Funds as of March 31, 2011. Washington DC: World Bank.Google Scholar
World Bank. 2013. 2012 Trust Fund Annual Report. Concessional Finance and Global Partnerships Vice Presidency. Washington, DC: World Bank.Google Scholar
World Bank. 2014a. Trust Fund Databases: Main Trustees. Washington DC: World Bank.Google Scholar
World Bank. 2014b. Trust Fund Databases: Contributions. Washington DC: World Bank.Google Scholar
World Bank. 2014c. World Development Indicators. Washington DC: World Bank. Available at <http://data.worldbank.org>. Accessed 2 January 2014..+Accessed+2+January+2014.>Google Scholar
World Bank. 2014d. World Development Report 2014: Risk and Opportunity—Managing Risk for Development. Washington DC: World Bank.Google Scholar
Zellner, Arno. 1962. An Efficient Method of Estimating Seemingly Unrelated Regressions and Tests for Aggregation Bias. Journal of the American Statistical Association 57 (298):348–68.Google Scholar
Supplementary material: File

Reinsberg et al supplementary material

Reinsberg et al supplementary material 1

Download Reinsberg et al supplementary material(File)
File 1 MB