State Capacity and World Bank Project Success

Prepared for presentation at the 2019 annual meeting of the American Political Science Association, Washington, DCVersion: August 2019In what types of institutional environments are international development projects most likely to succeed? Previous research suggests alternatively that liberal economic policies, democratic political institutions, and institutions characterized by "good governance" are all of primary importance. A serious drawback of this work is that measures of institutional quality tend to have poor coverage and conceptual fuzziness. This paper uses a new measure of state capacity with continuous coverage from 1960-2015 to evaluate the importance of di↵erent types of institutions on the success of over 10,000 World Bank projects. The results suggest that development projects are most likely to succeed where state capacity is relatively high, regardless of regime type and across di↵erent types of loans. Successful World Bank projects can, in turn, have a positive impact on State Capacity suggesting the possibility of a virtuous circle of development projects and state capacity building