The political economy of project preparation: An empirical analysis of World Bank projects

Using a novel application of stochastic frontier analysis to overcome data limitations, this paper finds substantially shorter project preparation periods for World Bank loans to countries that are geopolitically important (especially to the U.S.). Accelerated preparation is one explanation for how the World Bank might increase the number of loans to a recipient member country within a fixed time frame, for example in response to that country siding with powerful donor countries on important UN votes or while that country occupies an elected seat on the UN Security Council or the World Bank Executive Board. This channel of donor influence has important implications for institutional reform and provides a new angle to examine the cost of favoritism and the impact of project preparation.