Can strong donor governance rescue projects in weak-governance recipient countries? Evidence from the World Bank

Abstract

International aid is increasingly directed toward countries characterized by weak governance, institutional instability, and conflict, where achieving development outcomes is highly uncertain. As key governance actors in aid projects, donor agencies play an important role in driving project success. However, empirical evidence remains limited on how the relationship between donor project governance and project outcomes varies across recipient-country governance environments. To fill this gap, this study examines how recipient-country governance and donor project governance—both directly and jointly—relate to aid project outcomes. We compile a dataset of 6,773 World Bank projects completed in 167 countries between 1996 and 2025, linking Independent Evaluation Group (IEG) project performance ratings with the Worldwide Governance Indicators (WGI). Our results indicate that donor project governance is positively associated with project success. This association is stronger in weaker-governance environments, indicating a compensatory pattern. However, when aiming for the highest levels of project performance, a complementary relationship emerges, in which donor project governance becomes more effective as recipient-country governance improves. A similar complementary pattern is observed in fragile and conflict-affected situations (FCS). Overall, donor project governance is important but context-dependent and bounded. It can partially alleviate institutional constraints in weak-governance settings, but cannot fully substitute for recipient-country governance capacity. These results highlight the need for donor agencies to adopt differentiated governance strategies tailored to local institutional conditions and project performance objectives.

The authors' abstract, as published at the source. World Development, 2026 · DOI ↗