Indonesia is, what the World Development Report 2008 calls, a transforming country characterized by increasing rural-urban income disparities and high poverty rates. Bearing these facts in mind, it is striking how little is known about causes and mechanism of the underlying determinants of...

As is now well documented, aid is given for both political as well as economic reasons. The conventional wisdom is that politically-motivated aid is less effective in promoting developmental objectives. We examine the ex-post performance ratings of World Bank projects and generally find that...