Assessing Impact

Donors want evidence that funds provided by their taxpayers achieve results, and the recipients of funds want to see tangible improvements in their living conditions.

Aid Effectiveness

In 2002 the Bank undertook a study of the effectiveness of development assistance over the past half-century. According to the final report, The Role and Effectiveness of Development Assistance: Lessons from World Bank Experience (663k pdf), progress overall in this period has been remarkable:

• Over the past 40 years, life expectancy at birth in developing countries increased by 20 years.
• Over the past 30 years, illiteracy in the developing world has been cut nearly in half, from 47 percent to 25 percent of all adults.
• In the past two decades the number of people living in abject poverty (defined as living on less than $1 a day) has finally begun to fall—by perhaps 200 million people—after rising through most of the 19th and 20th centuries.

Driving much of this progress has been an acceleration of growth rates in the developing world. Just since 1990, developing countries’ economies have on average grown faster in per capita terms than those of Organisation for Economic Co-operation and Development (OECD)—at a rate of 1.9 versus 1.6 percent. This is largely as a result of improved policies, including a stronger market orientation, which have created better environments for private-sector growth in many countries.

Progress on health, education, and income is not accidental. Governments, with the support of the development community and civil society organizations, have accelerated growth and poverty reduction by improving their policies, institutions, and governance, and through well-designed projects and programs.

But this progress has been uneven and can be misleading. Nor has development assistance always been fully effective. Africa as a region saw no increase in its overall per capita income between 1965 and 1999. AIDS reduced life expectancy in Sub-Saharan Africa by three years in the 1990s, and average incomes in the region have been stagnant since 1965. Many of the transition economies of Eastern Europe and Central Asia have also suffered through sharp rises in poverty in the 1990s.

World Bank concessional assistance is efficient at reducing poverty. IDA funds, which are focused on poor countries, prove to be particularly effective: they are 50 percent more efficient than overall official development assistance (ODA). Well-targeted aid also increases private investment, both domestic and foreign, by supporting improved policies and helping to strengthen the regulatory framework, institutions and infrastructure that entrepreneurs require. Research cited in the study shows that every dollar of IDA leads to an increase of nearly two dollars in gross investment, including 60 cents in foreign direct investment (FDI).

Bank operations also make a difference in the areas of health and education. The Bank is the world’s largest external funder of education, having provided a cumulative $30 billion for education projects. It also is the world’s largest external funder of health programs, with new commitments of $1.3 billion a year for health, nutrition, and population projects. These projects had significant results in themselves and were often replicated outside the original project area.

• In China, for example, a project in the late 1990s helped raise the proportion of households using iodized salt from 40 to 89 percent, reducing iodine deficiency in targeted age groups from 13 to 3 percent. Ultimately, this will result in average gains of 10 to 15 points in children’s IQ levels in affected communities.
• In Mali, a project in the early 1990s raised the share of children fully vaccinated from 0 to 24 percent.
• In the education sector, girls’ enrollment in Bangladesh has increased dramatically — from 34 percent of secondary-school enrollment in 1990 to 48 percent in 1997 — with support from a Bank project.

Analysis and advice are as important as finance. While the World Bank is best known as a financier, one of its most important roles is in the provision of analysis and advice, critical to lasting policy improvements that impact growth and poverty reduction.

In many countries the resource flows from all sources are not large enough for the money alone to make a major difference relative to the scale of the challenge. When the international financial institutions and other donors have had major effects on development, it is because their assistance has gone beyond mere resource transfer and has helped countries to make fundamental changes whether in institution building or the replication of pilot projects. In six countries the Bank identified a significant contribution made, along with other donors, in advice and analysis as much as financing the formed the basis of country-implemented reforms: China, India, Mozambique, Uganda, Poland,  and Vietnam.
 
Results: The Bank, along with the entire donor community, has placed unwavering focus on results in order to strive to meet the MDGs in time. Without specificity, scaling-up, and coordination, they will not be met. In addition to its programmatic efforts, the Bank is working on the establishment of the framework for global monitoring to measure key indicators and progress toward the MDGs.

In the case of the International Development Association, moneys provided by donors for the trust fund’s most recent replenishment in July 2002 were contingent on intensive monitoring and results measuring and have prompted the new results-based Country Assistance Strategy .

But measuring mechanisms are being applied to all Bank programs. To be approved by the Board of Directors, a project must be linked with a Millennium Development Goal or one of the Bank’s core strategic principles. Concurrently, the Bank’s project database is now indexed thematically .

Evaluation and Oversight

The Bank has a number of internal and external monitoring systems.

• The oldest and largest is the  Operations Evaluation Department , created some 30 years ago, which reports directly to member countries on the Bank’s performance. Project outcomes, as measured by the World Bank's independent Operations Evaluations Department, have improved sharply over the past decade. Despite the growing complexity and more demanding nature of the development agenda, the Bank increased the share of projects rated as satisfactorily attaining key project objectives from well below 60 percent in the late 1980s to above 80 percent today.

• In 1993, members created an independent inspection panel to respond to concerns of people affected by Bank projects and to make sure that safeguard policies are being enforced.

• Unlike OED, which reviews programs after completion, the Bank's internal Quality Assurance Group (QAG) monitors them during implementation when adjustments can still be made. An Internal Auditing Department oversees risk management and internal controls. The Department performs its work in accordance with the Standards for the Professional Practice of Internal Auditing of the Institute of Internal Auditors.

• In November 2000 the Corporate Committee on Fraud and Corruption Policy was created to ensure that the Bank Group develops anticorruption policies and strategies that contribute effectively to its poverty reduction goals. The Bank's  corruption and fraud investigation unit is now known as the Department of Institutional Integrity (INT). INT investigates any allegations of fraud and corruption within the Bank Group or in connection with Bank-financed contracts, and any allegations of unethical behavior by Bank staff. In addition, the Ethics Office reports directly to the Bank's President and is responsible for outreach and communications on ethics matters.

• And, in fiscal 2001 the Bank established a  Quality Assurance and Compliance Unit in its Environmentally and Socially Sustainable Development Network to ensure the consistent implementation of safeguard policies, such as the policy on indigenous people or the policy on involuntary resettlement, and to give advice on safeguard issues in projects.