Transformation of Payment Models in the World Bank: Does the Result-based Payments (Program-for-Results Financing) Really Reduce Corruption in Borrowing Countries?
This study finds a surprising correlation between the engagement of Program-for-Results (PforR) Financing, a results-based financing mechanism started by the World Bank in 2012, and the corruption in a beneficiary country. Countries using the program tend to have higher corruption. It was expected that an external intervention of a results-based financing program would be associated with a lower level of corruption in the government. Regression models built on the empirical literature used the control of corruption index as the dependent variable and the dummy independent variable indicating whether the country participated in the PforR controlling for significant influences on corruption. The results of the regression indicate that the engagement of PforR is unexpectedly negatively associated with the cleanliness of governance, that is, the engagement of PforR appears to worsen the level of corruption in the government. The probable explanation for the results may be the reverse choice, which means that the World Bank is more likely to apply this mechanism to the operations in the countries with higher level of corruption. In addition, overestimates of the inputs in the program operations may also be a reason for higher corruption.
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Governance and Anti-Corruption Action Plans and Strategies: Secrets to Success in World Bank Investment Project Financing? Denly, Michael (Georgetown University, 2015)Poor governance and corruption pose fundamental problems for development. International financial institutions and governments around the world accordingly expend significant portions of their resources and convening power ...