Supervision and performance: the case of World Bank projects

This paper explores the impact of donor supervision on development project performance using data from World Bank-funded projects. Maximum likelihood estimation of a restricted ordered probit function finds that early supervision has a positive impact on performance. Given the size of World Bank-funded projects, gains from increasing supervision far outweigh the costs. The results provide evidence of an institutional bias toward lending at the expense of increased development impact. (C) 2000 Elsevier Science B.V. All rights reserved. JEL classification: F35; O19; O22.