Allocation of Implementing Power: Evidence from World Bank Projects

In this paper we explore the factors that determine the level at which World Bank projects are implemented. In particular, focusing on the importance of informational asymmetry between levels of government, we empirically assess whether this choice is influenced by the relative importance of local information at the recipient country level. Using an AidData dataset that provides information on more than 5800 World Bank projects for the period 1995-2014, and controlling for characteristics at both country and project level, we find that transparency does influence the probability that a project is implemented locally rather than nationally. More specifically, a one standard deviation decline in transparency increases the probability that a World Bank project will be implemented locally by 3 percent.