Can the World Bank make a difference in a large middle-income country like Brazil?

One of the major aspirations of the World Bank is to make a real impact on the countries’ development. But when the Bank is a small player relative to the size of the country, can it be what we call transformational?

There might be some clues in  the recently published evaluation of experiences of the World Bank in Brazil, made by the Independent Evaluation Group, the entity that assesses the Bank’s results. 

When discussing Bank operations in Brazil, we need to recognize that they are very modest relative to the Brazilian economy, even though they are significant from the Bank’s perspective. In 2011, for example, World Bank lending in Brazil represented just 0.3% of all public expenditure.

Yet the evaluation shows that the Bank made important contributions to some of the major transformations in the country.  How did it happen?  Take the example of Bolsa Família (link in Portuguese)—a nationwide conditional cash transfer program targeted to poor families. 

This program owes its huge success to the vision and efforts of the Brazilian government.  And in the process, the World Bank helped enhance positive outcomes in some areas.  Bolsa Família  provides income support contingent on some actions by families to improve the education and health of their children.  Various studies have attributed to this program the decline in extreme poverty and income inequality in Brazil as well as improvements in several education and social indicators.

The Independent Evaluation Group found that the Bank’s most important contributions came from something that is much more valuable than just money: its technical and knowledge assistance.  The Bank provided its global knowledge and tailored it to the specific challenges in Brazil, and helped the government consolidate the various social programs under Bolsa Família, establish a unique register of beneficiaries, improve targeting, and enhance systems for monitoring and evaluation. 

This success is the result of a strong partnership between the Brazilian government and the World Bank team.  No one victory defines the nature of this relationship.  The most valued contribution among the people we talked to as part of this evaluation is that Bank experts served as the trusted advisors to government officials from the early phases of the program, working alongside them to develop solutions as the program evolved.  In this setting, the Bank became part of the team that enabled Bolsa Família to transform the lives of millions of poor families in Brazil.

The value of such interactions, in which Bank experts witness the ups and downs of a program and think through the best solutions, is seen in other successes in Brazil: 

• In Ceará and Minas Gerais, the Bank helped the state governments strengthen their results orientation and management. 
• In Rio de Janeiro, the Bank held a sustained dialogue on the quality of learning in schools.  
• The International Finance Corporation, a member of the World Bank Group focused on the private sector, worked closely with the National Bank of Economic and Social Development (BNDES) as a transaction advisor in public-private partnership advisory projects and helped set new standards for subsequent transactions in the relevant areas. 

However, the dialogue was more challenging in some areas.  In the evaluation, we note that in the period evaluated (until 2011) dialogue on some of the major development challenges that Brazil faces today was more limited, for example in the areas of relieving infrastructure bottlenecks, enhancing private sector participation in infrastructure investments, reducing the cost of doing business, and increasing competition in the financial sector. These areas are now moving to the center of attention of the Government, and the Bank will be actively working to take steps for further collaboration. 

Defining the appropriate level of engagement on issues when the prospect for concerted efforts with the government is narrow may be challenging.   To the extent that success depends critically on partnership, why spend resources on issues with little traction from the government? 

In the report, we argue that to serve the role of trusted advisor effectively, it is important for the Bank to base its advice on a holistic understanding of the country’s medium- to long-term development needs.  And such an effort may require undertaking some analytical work and dialogue on areas where the government interest in engaging with the Bank is limited. 

In this context, the Bank may be able to exercise its convening power and create a different type of environment for dialogue—one with more academic participation and less direct policy links.  The diagnostics to be conducted under the new country engagement model of the Bank change initiative could also provide an important platform for dialogue. 

The experiences in Brazil suggest that a key to have a real impact in a large middle-income country is to build a solution-oriented partnership with the government.  But the real challenge is in areas where such a partnership is hard to come by.