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:
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.
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.