World Bank Independence: A Model and Statistical Analysis of US Influence

This paper develops a model to test whether World Bank lending caters to US interests. We use country‐level panel data to examine the geographic distribution of World Bank lending to 110 countries from 1968 to 2002. After controlling for country characteristics expected to influence the distribution of lending in a manner consistent with the World Bank's charter and stated allocation mechanisms, we introduce variables reflecting US interests. The empirical results are consistent with a significant US influence, but one which varies across presidential administrations. These findings have important implications because donor influence may reduce the credibility, and hence the development effectiveness, of multilateral aid organizations.