External Environment as a Critical Success Factor in World Bank Projects

The final copy of this thesis has been examined by the signatories, and we find that both the content and the form meet acceptable presentation standards of scholarly work in the above mentioned discipline. Over the past few decades, the proportion of international development projects that have been successful has remained low across development agencies. In recent years, researchers have explored Critical Success Factors for international development projects in an attempt to explain and fix this disappointing project performance. Most of the research has been concerned with project-level factors, such as quality of monitoring, coordination and design, and many of these factors have been shown to be positively related to success. However, projects do not take place in a bubble; they are part of a complex system made up of people, governments and nature. Therefore, this study considers factors of the larger external environment, such as governance and economy. Using project data from the World Bank's Independent Evaluation Group and country-level indicators from various sources, Principal Component Analysis identifies five components that describe Environmental. Regression shows that good governance and a high level of industrialization are strongly related to better project performance. This study explores these relationships for various project sectors and regions. Finally, this research concludes that unfavorable external conditions can be offset by improved World Bank supervision, which is associated with substantially higher project success rates. iv ACKNOWLEDGMENTS I would like to thank my advisors, Bernard Amadei and Rajagopalan Balaji, for their ideas, guidance and assistance, without which I would not have been able to complete this thesis. I would also like to acknowledge Rita Klees for her feedback and participation on the Advisory Committee. Finally, I am grateful to my friends and family for their unending love, support and enthusiasm during this process. v CONTENTS