Linking Diagnostics to Action: Opportunities for the World Bank's International Development Association

World Bank President David Malpass, IMF Managing Director Kristalina Georgieva and U.S. Treasury Secretary Janet Yellen in discussion at the 2021 World Bank Spring Meetings. | World Bank/Brandon Payne

By Parker Essick and Pat Austria Ramsey

For countries to reach their long-term development goals and to break cycles of fragility and poverty, they need to build well-functioning core governance systems that are accountable to citizens and set foundations for economic growth. While World Bank development portfolios have continued to grow in complexity and ambition, the centrality of good governance and the need for functioning institutions remain. The ongoing COVID-19 pandemic has only reaffirmed the importance of core government functions for states to be able to respond to and manage crises. The ability to provide services, trust and demonstrable outcomes to citizens remains the most important measure by which to determine state effectiveness. It is in understanding how best to support these functions and systems that development partners can work towards better outcomes for states and the people they serve.

The World Bank’s International Development Association (IDA) remains one of the most important and influential development institutions in the world. The resourcing, expertise and convening power that IDA focuses on the world’s poorest is unparalleled. While IDA began in 1960 with an initial fund of $912.7 million for four countries, IDA19 (2020-2022) commitments have totaled $82 billion for 76 eligible countries, providing both financial and knowledge resources to support core government functions in the most fragile and difficult contexts. IDA19 continues the World Bank’s commitment to strengthening governance and institutions in fragile contexts, as first introduced through the Governance and Institutions Special Theme in IDA18 (2017-2020).

IDA’s effectiveness necessitates the ability to diagnose what works and what does not in each country’s institutions, resources, outcomes and programs. Particularly as it begins an early replenishment to support countries still grappling with the effects of the pandemic, IDA needs an accurate diagnosis of state capacity and effectiveness to target approaches that maximize impact for institutions and governments as they plan for recovery and prepare for future crises.

The Institute for State Effectiveness’s (ISE) forthcoming report, From Making the Case to Making the Choice: Strengthening the Link Between Core Government Diagnostics and IDA Approaches, aims to understand IDA’s process for diagnosing state capacity and to recommend how those assessments can better inform IDA allocations for improved development outcomes. More specifically, it attempts to answer the following:

1. 1. How does IDA support core government functions, and how are strategic programming decisions currently made?
   2. What is the landscape of assessments and evaluations of core functions? What is missing? What is overly relied on?
   3. How do these assessments factor into the IDA approach, and how can they be better integrated into decision-making?

In response to these questions, ISE’s report combines research, data analysis, literature reviews and expert interviews. The ISE team conducted an analysis of the World Bank’s Independent Evaluation Group (IEG) reports and Bank documents on IDA processes and constraints; data analysis of the IDA allocation system; qualitative mapping of current IDA assessments; interviews and case studies on the use of IDA assessments; data analysis of the relationship between IEG project ratings and IDA assessments; and interviews and literature reviews on best practices for IDA strategy.

Our analysis shows that current diagnostic methods provide a useful yet incomplete view of state capacity. For example, while the Country Policy and Institutional Assessment (CPIA) is regarded as a primary tool to measure state capacity (and determine IDA allocations), analysis and interviews indicate that the measurement fails to capture the nuances and changes to an environment that are important in the design and implementation of operations. While there are several other diagnostics and assessments produced by the development community, many are used infrequently, and a number of gaps exist.

Strengthening the link between strategy and operations requires a more comprehensive view of state capacity to provide useful insights for improved development outcomes and aid effectiveness. Currently, diagnostics are primarily used to describe a country’s context in the narrative of IDA strategic documents. However, when viewed holistically, these assessments can provide more tangible and actionable insights for decision-makers. The findings of existing evaluations and assessments can better inform IDA’s approach through a variety of strategic levers, including project complexity, delivery mechanism, financing instrument, implementing agency, institutional partners and timeline.

Supporting core functions of government – particularly in IDA countries confronting fragility, violence and capacity constraints – requires greater ability to translate diagnostic findings into specific IDA allocations and approaches. Leveraging years of ISE’s global expertise and localized knowledge, the report provides a number of specific recommendations to maximize how IDA resources are used to support governance institutions and outcomes for citizens.

1. 1. IDA’s continued commitment to supporting core government functions necessitates more robust methods by which to assess the capacity, resourcing and performance of a state’s institutions. The inability to identify key moments of change and opportunity can make it difficult for IDA managers and Task Team Leaders to translate the findings of traditional assessments such as the CPIA into actionable insight for improved operations.
   2. Diagnostic capacity can be improved by measuring government not only in form but in a wider range of functions as well. The landscape of assessments shows a number of duplicative efforts that can be better coordinated to cover a wider range of topics, scope and institutional features. Coordinating assessments around a comprehensive framework focused on measuring core government functioning would maximize the impact of IDA’s operations and country policy.
   3. A more comprehensive perspective of capacity is needed in order to identify the key operational risks and assets in IDA countries. ISE is finalizing a Core Government Diagnostic that illustrates the opportunity to build upon existing assessment methodologies and create a more holistic view of the institutions, resourcing, outcomes and Bank portfolio performance around core government functions.
   4. Using assessments to identify and flag both the risks and assets associated with the performance of a country’s core government functions can provide insights into the constraints and opportunities that impact the achievement of development outcomes. Flagging both risks and assets – as illustrated in ISE’s forthcoming Core Government Diagnostic – can allow IDA managers and Task Team Leaders to target focus areas and entry points for reform.
   5. Assessments are typically used for conceptual understanding in setting the country landscape for strategic documents in IDA countries; however, more actionable insight can be drawn from these findings. While assessments can be used to provide IDA stakeholders with a technical understanding of the situation on the ground, linkages should be made between diagnostical findings and the various levers IDA stakeholders can use to ensure Bank strategy and operations are geared and tailored to strengthen core functions. ISE is finalizing a Decision Tree Framework that draws on results of the Core Government Diagnostic to provide actionable insights to IDA stakeholders on the use of a variety of strategic levers.

Improved diagnostic capacity and the ability to translate findings into actionable insight have universal importance as governments struggle to effectively respond to the increased demands on core government functions. Due to the impacts of the COVID-19 pandemic, people and citizens of every country have relied on their governments more in the past year than ever before. The ability to effectively diagnose and flag the binding constraints and key opportunities of government institutions is a universally needed tool. With IDA20, there is an important opportunity to better understand and utilize diagnostics to not only understand context but provide actionable insight for improved aid and state effectiveness.