How Does Knowledge on Public Expenditures Integrate with the Design of Development Policy Operations?

Integration of knowledge with lending is an enduring theme in World Bank strategies at the corporate and country levels. The Bank lending instruments could be more relevant and produce better results if they incorporate key analytical, country-level knowledge. The goal of this learning product is to contribute modestly to the understanding of how this knowledge-lending integration works in practice and raise questions for further research.It examines the extent to which an important type of Bank knowledge—on public expenditures—informs the design of Development Policy Operations (DPOs). It is hoped that this preliminary analysis can provide the IEG and the Bank with useful lessons as it evolves toward an integrated “solutions Bank” and the twin goals. The analysis is not just retrospective. It also seeks to inform the ongoing and future efforts toward integrating knowledge and lending, Systemic Country Diagnostics (SCD), and the design of DPOs. It also aims to inform the OPCS 2015 DPO Retrospective.Public expenditure knowledge for the purpose of this paper is identified as the body of World Bank knowledge products specifically referred to in their titles as Public Expenditure Review, whether they are multi-sector or sector public expenditure reviews, but they also include other economic and sector work (ESW) which directly or mostly deal with public expenditure issues. This broad definition should capture much of the public expenditure-related analytical work at the Bank. Arguably, efficiency and allocation issues important in the design of DPOs and reforms they support can only be addressed by such integrative, not partial or silo-type knowledge of specific subsector expenditures