Moving Up the Ladder : An Analysis of IDA Graduation Policy
This paper analyzes the factors that affect countries’ graduation from International Development Association (IDA) assistance and develops a statistical model of graduation. IDA provides concessional financing (credits, grants, and guarantees) to the world’s poorest countries to help reduce pov...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/198781586374121992/Moving-Up-the-Ladder-An-Analysis-of-IDA-Graduation-Policy http://hdl.handle.net/10986/33582 |
| Summary: | This paper analyzes the factors that affect countries’ graduation
from International Development Association (IDA)
assistance and develops a statistical model of graduation.
IDA provides concessional financing (credits, grants,
and guarantees) to the world’s poorest countries to help
reduce poverty and improve living standards. IDA’s eligibility
criteria include (a) absence of International Bank
for Reconstruction and Development (IBRD) creditworthiness
and (b) gross national income (GNI) per capita
below the IDA operational cutoff. Following several ‘reverse
graduations’ during the 1990s, the set of factors affecting
graduation decisions broadened to include an assessment
of the country’s macroeconomic prospects, risk of debt distress,
vulnerability to shocks, institutional constraints, and
levels of poverty and social indicators. Through a pooled
logit estimation using panel data covering IDA-eligible
countries for 1987–2016, the authors determine the factors
that influenced IDA graduation decision making for
FY1989–FY2018. They find that throughout the sample
the probability of being a graduate is positively and statistically
significantly associated with income per capita,
creditworthiness, and country size. They account for the
shift of policy after 1998. Using an interaction dummy variable
to capture the pre-FY1999 period, they find that life
expectancy, reduced poverty, urbanization, and institutional
development have been positive and significant predictors
of graduation status in the later period. |
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