Building State Capacity : What Is the Impact of Development Projects?
Although research has established the importance of state capacity in economic development, less is known about how to build that capacity and the role of external partners in the process. This paper estimates the impact of a typical development project designed to build state capacity in a low...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/972301638988752613/Building-State-Capacity-What-Is-the-Impact-of-Development-Projects http://hdl.handle.net/10986/36694 |
| Summary: | Although research has established the importance of state
capacity in economic development, less is known about
how to build that capacity and the role of external partners
in the process. This paper estimates the impact of a typical
development project designed to build state capacity in a
low-income country. Specifically, it evaluates a multilateral
development bank project in Tanzania, which incentivized
investments in local state capacity by offering grants conditional
on institutional performance scores. The paper uses a
difference-in-differences methodology to estimate the project
impact, comparing outcomes between 18 project and 22
non-project local governments over 2016–18. Outcomes
were measured through two rounds of primary surveys of
nearly 500 local government officials and nearly 3,000
households. Over the course of the project, measured state
capacity improved in project areas, but due to comparable
gains in non-project areas, the project’s value-added to
change in state capacity is estimated to be zero across all the
dozens of relevant variables in the surveys. The data suggest
that state capacity is evolving in Tanzania through endogenous
changes in trust and legitimacy in the country rather
than from financial incentives offered by external partners. |
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