Which Donors, Which Funds? The Choice of Multilateral Funds by Bilateral Donors at the World Bank

47 Pages Posted: 13 Jul 2014

See all articles by Bernhard Reinsberg

Bernhard Reinsberg

University of Cambridge; University of Glasgow - School of Social and Political Sciences

Katharina Michaelowa

University of Zurich - Centre for Comparative and International Studies (CIS)

Stephen Knack

World Bank - Development Research Group (DECRG)

Multiple version iconThere are 2 versions of this paper

Date Written: June 24, 2014

Abstract

The rapid growth of trust funds at multilateral development organizations has not received much attention in the academic literature. We consider the choice by sovereign donors among various types of multilaterally channeled funds. Taking the example of the World Bank, we distinguish between core funding through the International Development Association and trust funds, as well as different types of trust funds. Our argument builds on the premise that a donor trades off burden sharing in larger funds versus preference matching in smaller funds. Our model generates the prediction that trust funds are a result of larger incompatibility of donor preferences and IDA activities. In addition, if donors cannot agree based on their bilateral aid preferences, they should engage in smaller trust funds. Using a sample of World Bank trust funds which received contributions from OECD/DAC donors over the last decade, we corroborate our main hypotheses. Moreover, we show that donors rely on specific kinds of trust funds to alter IDA policies.

Keywords: Trust funds, multilateral funds, World Bank, aid allocation

JEL Classification: F35, F36, D70

Suggested Citation

Reinsberg, Bernhard and Michaelowa, Katharina and Knack, Stephen, Which Donors, Which Funds? The Choice of Multilateral Funds by Bilateral Donors at the World Bank (June 24, 2014). Available at SSRN: https://ssrn.com/abstract=2465369 or http://dx.doi.org/10.2139/ssrn.2465369

Bernhard Reinsberg (Contact Author)

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

University of Glasgow - School of Social and Political Sciences ( email )

United Kingdom

Katharina Michaelowa

University of Zurich - Centre for Comparative and International Studies (CIS) ( email )

Affolternstrasse 56
8050 Zurich
Switzerland

HOME PAGE: http://www.cis.ethz.ch/

Stephen Knack

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-458-9712 (Phone)

HOME PAGE: http://econ.worldbank.org/staff/sknack

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