Foreign Aid and Power Play: Political Cycles in World Bank’s Procurement Allocation

This paper examines the existence of political cycles in the awarding of World Bank procurement contracts around elections. We consider elections in the home country of the firms that win the contracts, whether that country is the recipient of the aid project or another supplier country. Our findings indicate that domestic firms are more likely to secure larger contracts around elections in the recipient country, particularly when corporate donations to candidates are allowed. Additionally, the results show an increase in the size of contracts awarded to foreign firms ahead of elections in their home countries, suggesting a cross-border political cycle. This political cycle appears to be driven by cases where strong aid partnerships and historical colonial ties exist between the supplier and recipient countries.

‍