2001 Annual Review of Development Effectiveness: Making Choices

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  • 2001 Annual Review ofDevelopmentEffectiveness

    2001 Annual Review ofDevelopmentEffectivenessMaking ChoicesMaking Choices

    1818 H Street, N.W.Washington, D.C. 20433, U.S.A.Telephone: 202-473-1000Facsimile: 202-477-6391Telex: MCI 64145 WORLDBANK

    MCI 248423 WORLDBANKInternet: www.worldbank.org

    Operations Evaluation DepartmentPartnerships & Knowledge Programs (OEDPK)E-mail: ecampbellpage@worldbank.orgE-mail: eline@worldbank.orgTelephone: 202-458-4497Facsimilie: 202-522-3125

    World Bank InfoShopE-mail: pic@worldbank.orgTelephone: 202-458-5454Facsimilie: 202-522-1500

    2001 Annual Review

    of Develop

    ment Effectiveness M

    aking C

    hoices2001 A

    nnual Review of D

    evelopm

    ent Effectiveness Making

    Choices

    THE WORLD BANK THE WORLD BANK

    TH

    E W

    OR

    LD B

    AN

    K

    WORLD BANK OPERATIONS EVALUATION DEPARTMENT

    ISBN 0-8213-5139-7

    1 5 1 3 9

    9 780821 351390

  • ENHANCING DEVELOPMENT EFFECTIVENESS THROUGH EXCELLENCE AND INDEPENDENCE IN EVALUATION

    The Operations Evaluation Department (OED) is an independent unit within the World Bank; it reports directlyto the Banks Board of Executive Directors. OED assesses what works, and what does not; how a borrower plansto run and maintain a project; and the lasting contribution of the Bank to a countrys overall development. Thegoals of evaluation are to learn from experience, to provide an objective basis for assessing the results of theBanks work, and to provide accountability in the achievement of its objectives. It also improves Bank work byidentifying and disseminating the lessons learned from experience and by framing recommendations drawn fromevaluation findings.

    OPERATIONS EVALUATION DEPARTMENT

  • 2001 AnnualReview ofDevelopmentEffectivenessMaking Choices

    William Battaile

    2002THE WORLD BANK

    Washington, D.C.

    W O R L D B A N K O P E R A T I O N S E V A L U A T I O N D E P A R T M E N T

    http://www.worldbank.org/oed

  • 2002 The International Bank for Reconstruction and Development / The World Bank

    1818 H Street, NW

    Washington, DC 20433

    All rights reserved.

    Manufactured in the United States of America

    First Printing May 2002

    1 2 3 4 03 02 1

    The findings, interpretations, and conclusions expressed here are those of the author(s) and do not necessarily reflect the

    views of the Board of Executive Directors of the World Bank or the governments they represent.

    The World Bank cannot guarantee the accuracy of the data included in this work. The boundaries, colors, denomina-

    tions, and other information shown on any map in this work do not imply on the part of the World Bank any judgment

    of the legal status of any territory or the endorsement or acceptance of such boundaries.

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    World Bank, 1818 H Street NW, Washington, DC 20433, USA, fax 202-522-2422, e-mail pubrights@worldbank.org.

    ISBN 0-8213-5139-7

    Library of Congress Cataloging-in-Publication Data has been applied for.

    Printed on Recycled Paper

  • i i i

    Contents

    vii Acknowledgments

    ix Foreword, Prefacio, Avant-Propos

    xiii Executive Summary, Resumen, Rsum Analytique

    xxix Abbreviations and Acronyms

    1 1. Making Development Choices

    5 2. Instruments of Bank Assistance5 Financial Services

    5 Investment, Adjustment, and Other Instruments7 Recent Lending Choices

    9 Nonfinancial Services9 ESW Reflecting Corporate Priorities

    10 Clear Instrument Guidance Is Key

    13 3. Performance at the Instrument Level13 Performance of Lending Assistance

    14 Performance Trends14 Outcome Trends15 Institutional Development Impact15 Sustainability15 Aggregate Project Performance Index (APPI)17 Performance by Region17 Performance by Sector19 Performance by Lending Instrument

    22 Determinants of Success22 Country Conditions Matter24 Project-Level Performance Also Matters

    25 Performance of Nonlending Assistance

  • 29 4. Country Strategies, Instruments, and Outcomes29 Corporate Selectivity and Country Strategies32 Country Strategies and Instrument Choice

    32 Defining Comparative Advantage Depends on Partners33 Logical Framework Application in the CAS34 Country Strategies Are Dominated by Lending35 Country Strategies in the Absence of a Lending Program37 Risk Management Through Gradual Engagement/Disengagement

    37 How Instruments Contribute to Country Outcomes37 Country Capacity38 Borrower Commitment and Policy Environment39 Directions for Effective Instrument Use in Country Strategies

    41 5. Sector and Thematic Strategies, Instruments, and Outcomes41 Selectivity Across Sectors43 Instrument Choice and Performance

    43 Instrument Choice Among Sectors44 Sector-Specific Issues in Instrument Choice46 Combining and Sequencing Instruments48 Innovative Approaches to Sector Assistance: SWAPs and Social Funds

    51 Policies and Actions in Support of Thematic Strategies53 High-Potential Approaches for Implementation

    57 6. Findings and Implications57 Continued Gains in Performance57 Implications for Policy

    57 Corporate Selectivity58 Enhancing Country Strategies59 Instrument Selection in Support of Sector Strategies

    59 Implications for Evaluation

    Annexes61 Annex A: The Banks Lending Instruments63 Annex B: A List of Disclosed OED Country Assistance Evaluations65 Annex C: Statistical Tables

    65 Table C.1. Outcome, Sustainability, Institutional Development (ID)Impact and Aggregate by Various Dimensions, Weightedby Projects, FY9699 and FY0001 Exits; Projects at Risk,Similarly Disaggregated, for the Active Portfolio

    66 Table C.2. Outcome, Sustainability, Institutional Development (ID)Impact and Aggregate by Various Dimensions, Weighted byDisbursements, FY9699 and FY0001 Exits; Disbursementsat Risk, Similarly Disaggregated, for the Active Portfolio

    67 Annex D: OED Evaluation Methodology71 Annex E: Managing Development Effectiveness: An Overview from the

    CODE Chairperson

    73 Endnotes

    77 Bibliography

    2 0 0 1 A n n u a l R e v i e w o f D e v e l o p m e n t E f f e c t i v e n e s s

    i v

  • Boxes20 Box 3.1. Which Objectives Have Bank Projects Been Most Effective in

    Achieving?27 Box 3.2. Bank-Managed Special Programs28 Box 3.3. Quality of the Banks Poverty Assessments35 Box 4.1. Synergy Between Sector Work and Lending36 Box 4.2. Kenya: Enhancing Lending Strategy in a Poor Policy

    Environment38 Box 4.3. Getting Better Instrument Results in Poorly Performing

    Countries48 Box 5.1. Combining Investment and Adjustment Lending for

    Institutional ReformPv

    Tables9 Table 2.1. Evolution of Diagnostic ESW

    10 Table 2.2. Country Coverage of Fiduciary Diagnostic ESW (FY9701)25 Table 3.1. Reasons for Unsatisfactory Outcomes34 Table 4.1. Country Program and Portfolio Performance39 Table 4.2. Quality of ESW by Country Policy and Institutional

    Environment50 Table 5.1. Core Features of SWAPs and Social Funds51 Table 5.2. Tools to Support Thematic Strategies

    Figures2 Figure 1.1. Three Dimensions of Selectivity6 Figure 2.1. The Instrument Toolkit6 Figure 2.2. Lending Instrument Choice (FY9001)8 Figure 2.3. Lending Risks, by CPIA and Credit Ratings (FY9601

    Approvals)8 Figure 2.4. Costs Differ by Lending Instrument (FY9601 Exits)

    14 Figure 3.1. Approval Years of Recently Evaluated Projects15 Figure 3.2. Trends in Outcomes16 Figure 3.3. Trends in Institutional Development Impact16 Figure 3.4. Trends in Sustainability17 Figure 3.5. Trends in Outcomes for Africa and Other Regions18 Figure 3.6. Trends in Outcomes by Region18 Figure 3.7. Trends in Outcomes by Sector19 Figure 3.8. Trends in Outcomes of Adjustment Operations21 Figure 3.9. Trends in Outcomes of Investment Operations22 Figure 3.10. Risks and Rewards of Lending Instruments23 Figure 3.11. The Cost Dimension, by CPIA Groups (FY90FY01 Exits)23 Figure 3.12. Instrument Performance Is Sensitive to Country Conditions

    (FY9601 Exits)24 Figure 3.13. Adjustment Outcomes in Africa Related to the CFA

    Devaluation26 Figure 3.14. Improved Bank Performance as Evaluated by OED and QAG31 Figure 4.1. Better Lending Outcomes Associated with Higher Policy

    and Institutional Quality (FY9601 Exits)31 Figure 4.2. More Lending to Countries with Better Project Outcomes

    (FY9601 Exits)

    C o n t e n t s

    v

  • 42 Figure 5.1. Major Shifts in Sectoral Commitments (FY9092 to FY9901Approvals)

    43 Figure 5.2. Different Sectors Rely on Different Instrument Groups(FY9601 Approvals)

    44 Figure 5.3. The Move to Adjustment Lending in Finance (FY9001Approvals)

    47 Figure 5.4. Costs and Outcomes Are Influenced by Quality ofOperating Environment

    2 0 0 1 A n n u a l R e v i e w o f D e v e l o p m e n t E f f e c t i v e n e s s

    v i

  • v i i

    Acknowledgments

    This report was prepared by a team ledby William Battaile. Carlos Reyes wasresponsible for Chapter 3 on instrumentperformance trends. Other team members wereZamir Islamshah, Gillian Perkins, and DeepaChakrapani. The team received excellent supportfrom Parveen Moses, Annisa Cline-Thomas, andBill Hurlbut. The report benefited from exten-sive contributions from OED staff, and drew ona wide range of recent OED country, sector, andthematic evaluations. Background papers andsupplemental analyses were provided by ManuelPenalver-Quesada, Laurie Effron, Nalini Kumar,Jed Shilling, Catherine Gwin, Diana Qualls,Anara Omarova, and Oliver Rajakaruna.

    The comments and guidance from peerreviewers are gratefully acknowledged, includ-ing Susan Stout, Irene Xenakis, Marisela Montoliu

    Muoz, David Hughart, Shawki Barghouti, JaimeBiderman, Aloysius Ordu, and Tim Johnston. TheReview was completed under the guidance ofVictoria Elliott, Manager of OEDCM.

    This study was published in the Partnershipsand Knowledge Group (OEDPK) by the Out-reach and Dissemination Unit. The task teamincludes Elizabeth Campbell-Pag (task teamleader), Caroline McEuen (editor), and JuicyQureishi-Huq (administrative assistant).

    Director-General, Operations Evaluation: Robert Picciotto

    Director, Operations Evaluation Department:

    Gregory Ingram

    Manager, Corporate Evaluations and Methods:

    Victoria Elliott

    Task Manager: William Battaile

  • This Page Intentionally Left Blank

  • i x

    FOREWORD

    In the face of a rapidlychanging development

    agenda, the World Bank has provenremarkably flexible in adapting andexpanding its operational toolkit.New lending instruments, analyticaltools, and partnership arrangementshave emerged to respond to the myr-iad needs and preferences of bor-rowers and to implement corporatestrategies. These innovations havecontributed to improvements in pro-ject and program performance.

    The broad endorsement of theMillennium Development Goalswithin the development commu-nity has put the spotlight on theresults of development activities.Accordingly, attainment of tan-gible, measurable, and sustainableimprovements in the health, edu-cation, and standard of living ofthe worlds poor is the overarch-ing challenge facing the Bank andits development partners.

    This is the fifth Annual Reviewof Development Effectiveness(ARDE). The 1997 Review con-centrated on the linkages betweenaid and development. The 1998Review reflected the lessons ofthe East Asia financial crisis. The1999 Review looked at the chal-lenges of implementing the Com-prehensive DevelopmentFramework, and identified prom-ising practices for dealing withthem, predicated on strong coun-try commitment to poverty reduc-tion and sustainable growth. The2000 Review concluded that theBank could implement its strate-gies more effectively by judicious

    PREFACIO

    En el actual contexto de rp-ida transformacin de las

    actividades de desarrollo, el BancoMundial ha demostrado una notableflexibilidad para adaptarse yampliar sus instrumentos operacio-nales. Han aparecido nuevos dispo-sitivos crediticios, herramientasanalticas y mecanismos de asocia-cin en respuesta a las innumera-bles necesidades y preferencias delos prestatarios y para aplicar lasestrategias institucionales. Estasinnovaciones han significado mejo-ras en los resultados de los proyec-tos y los programas.

    La amplia aceptacin de losobjetivos de desarrollo del mile-nio entre las instituciones intere-sadas en el desarrollo ha puestoen primer plano los resultados delas actividades de desarrollo. Enconsecuencia, el logro de mejorastangibles, cuantificables y sosteni-bles en los terrenos de la salud,educacin y nivel de vida de lospobres de todo el mundo es eldesafo general con que seenfrentan el Banco y sus asocia-dos en el desarrollo.

    Este es el quinto Examenanual de la eficacia en trminosde desarrollo. El Examen de 1997se centr en las vinculacionesexistentes entre la ayuda y el des-arrollo. En el de 1998 se conside-raron las enseanzas extradas dela crisis financiera de Asia orien-tal. En el de 1999 se analizaronlos desafos que representaba laaplicacin del Marco Integral deDesarrollo, y se identificaron lasprcticas ms prometedoras para

    AVANT-PROPOS

    Confronte lvolutionrapide de lordre du jour du

    dveloppement, la Banque mondialea russi adapter et largir lagamme de ses instruments opra-tionnels avec une souplesse remar-quable. Elle a su rpondre auxbesoins multiples des emprunteurset satisfaire leurs prfrences encrant de nouveaux instruments deprt et de nouveaux outils danalyse,et en forgeant des accords de parte-nariat. Ces innovations ont contribu amliorer les rsultats des projetset des programmes.

    Ladoption des Objectifs dedveloppement pour le mill-naire par lensemble de la com-munaut internationale a mis envidence limportance des rsul-tats des activits de dveloppe-ment. La mission primordiale quese sont fixe la Banque et de sespartenaires pour le dveloppe-ment, damliorer de faon tangi-ble, mesurable et durable la sant,lducation et le niveau de vie despauvres du monde entier, estdonc plus que jamais dactualit.

    Nous publions cette anne lacinquime dition de lExamenannuel de lefficacit du dvelop-pement (ARDE). Lexamende 1997 dcrivait les liens entrelaide et le dveloppement etcelui de 1998 tirait les leons dela crise financire dAsie de lEst.Lexamen de 1999 se penchait surles problmes de mise en uvredu Cadre de dveloppement int-gr et dgageait des moyens pro-metteurs pour les rsoudre,reposant sur la ferme volont des

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  • adaptation to diverse insti-tutional and social environ-ments, as well as byacknowledging and manag-ing differences betweenclient and Bank priorities.

    This years Review high-lights the choice of lending

    and nonlending instruments andactivities to achieve developmentobjectives. It complements theQuality Assurance Groups annualassessment o...

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