Lead or Follow? Participation Decisions in Collective Development Initiatives

Abstract

When and how do donors cooperate? While a growing literature emphasizes the importance of donor coordination for aid effectiveness, little is known about when and why donors join forces to advance common causes. We leverage the proliferation of special-purpose trust funds at multilateral organizations to cast light on this issue. We argue that not only the decision whether to engage but also when to engage—either as “lead donor” or as “follower” after other donors already contributed—carries important (yet overlooked) informational value. We develop expectations about how donors engage with trust funds building on theories of competitive regime creation and bureaucratic politics. We test these expectations using a novel data set of time-stamped funding commitment decisions by 30 OECD/DAC donors in 190 World Bank trust funds established between 1990 and 2020. We find that a donor is more likely to serve as lead donor if it is engaged in similar sectors as its peers. In addition, a donor is more likely to contribute to a fund already controlled by a group of donors if its own policy preferences are aligned with those of the existing members. The results have important implications for our understanding of donor coordination in an increasingly crowded multilateral development architecture.