Independent Evaluation Group Studies – serie

Development patterns, increasing population pressure, and the demand for better livelihoods in many parts of the globe all contribute to a steadily deepening global water crisis. Development redirects, consumes, and pollutes water. It also causes changes in the state of natural water reservoirs, directly by draining aquifers and indirectly by melting glaciers and the polar ice caps. Maintaining a sustainable relationship between water and development requires that current needs be balanced against the needs of future generations. The development community has transformed and broadened its approach to water since the 1980s. As stresses on the quality and availability of water have increased, donors have begun to move toward more comprehensive approaches that seek to integrate water into development in other sectors. This evaluation examines the full scope of the World Bank's lending and grant support for water activities. More than 30 background papers prepared for the evaluation have analyzed Bank lending by thematic area and by activity type. IDA and IBRD (the Bank) have supported countries in many water-related sectors.The evaluation, by definition, is retrospective, but it identifies changes that will be necessary going forward, including those related to strengthening institutions and increasing financial sustainability. Lessons and results from nearly 2,000 loans and credits, and work with 142 countries are identified.

The evaluation finds that the content of the World Bank's Country Policy and Institutional Assessment (CPIA) is largely relevant for growth and poverty reduction in the sense that it maps well with the determinants of growth and poverty reduction identified in the economics literature. However, some CPIA criteria need to be revised (in particular trade and finance), and one needs to be added (assessment of disadvantaged socio-economic groups). Second, the evaluation finds that the CPIA ratings are in general reliable and correlate well with similar indicators. The World Bank's internal review process helps guard against potential biases in having Bank staff rate countries on which their work programs depend. The CPIA ratings are found to correlate better with similar indicators for middle income countries than for low income countries. This could be because there is more information available on middle income countries, which increases the likelihood of different institutions having similar assessments on them.This could also be because the CPIA rating exercise takes into account the stage of development, which is more pertinent for low income countries, and which also subject the ratings of those countries to more judgment in an exercise that is already centered on staff judgment.

This Peru Country Program Evaluation for the World Bank Group, 2003-2009 is part of IEG's country program evaluation series. To date, IEG's in-depth country evaluations have comprised IEG-WB Country Assistance Evaluations (CAEs) and IEG-IFC Country Impact Reviews (CIRs). Both the CAEs and CIRs have involved comprehensive evaluations of the respective institutions' activities in a country. In a pilot approach, this evaluation was prepared by a single IEG team that looked at development interventions across the three WBG institutions. The evaluation draws on WBG documents, external literature, and on interviews with government officials, representatives of the private sector and civil society, nongovernmental organisations, bilateral and multilateral development partners, and Bank, IFC, and MIGA staff in Washington and in Peru. An IEG mission visited Peru in September 2009. IEG also cooperated with the Evaluation Office of the Global Environment Facility that was conducting a parallel evaluation in Peru.

This study from the Independent Evaluation Group draws lessons for development and climate change mitigation from the World Bank Group’s far-reaching portfolio of projects in energy, forestry, transport, coal power, and technology transfer. Reviewing what has worked, what hasn’t, and why, the evaluation’s key findings include: Energy efficiency can offer countries direct economic returns that dwarf those of most other development projects, while also reducing greenhouse gas emissions. Tropical forest protected areas, on average, significantly reduce tropical deforestation, preserving carbon and biodiversity. Deforestation rates are lower in areas that allowed sustainable use by local populations than in strictly protected areas. Deforestation rates were lowest of all in indigenous forest areas. For renewable energy projects, long-duration loans have been important in making projects financially viable.. But at prevailing carbon prices, carbon offset sales had little impact on most renewable energy projects’ rate of returns, and did not address investors’ need for up-front capital. Technology transfer – broadly understood to include diffusion of technical and financial innovations related to low-carbon development – has worked well when the logic of piloting and demonstration is well thought out, and when grants are used to mitigate the risk of pioneering efforts.

Impact evaluation has grown more popular as a method for identifying the causal links between interventions and outcomes. These kind of evaluations assess changes that can be attributed to a particular intervention. Both innovations in statistical methods and the demand for evaluations that can measure such development results are increasing. The World Bank Group is the largest producer of impact evaluations among all development institutions. Thus, IEG has evaluated the relevance, quality, and influence of World Bank and IFC impact evaluations. IEG finds that the World Bank Group portfolio of impact evaluations is largely aligned with sector strategies and project objectives. Selection and coordination of impact evaluations has been improving. Most World Bank impact evaluations meet either medium or high quality standards, and about half of IFC impact evaluations did. Issues related to funding, staff capacity, and incentives, however, constrain the scope and coverage of impact evaluations in the Bank Group. IEG makes five recommendations to strengthen the Bank Group's impact evaluation efforts, revolving around consistency, coordination, quality standards, and ensuring operational relevance. Both development and evaluation professionals will find valuable lessons in this evaluation. There are real benefits from impact evaluations, including their influence on development practices through contributions to project assessment and design of future projects. Thus, development practitioners engaged in designing projects, evaluators interested in using similar methodology, and the general evaluation community will be able to use the lessons IEG sets out in this report.

Youth employment issues are a major concern for many countries because they have negative effects on the welfare of young people, and may also adversely affect economic performance and social stability. This is the first Independent Evaluation Group (IEG) evaluation of the World Bank Group's support to countries trying to address youth employment issues.The World Bank lending portfolio for youth employment is relatively small, although components of programs appear in 57 countries. Most projects include interventions in skills development and school-to-work transition. Half of the projects include interventions to foster job creation and work opportunities for youth.The International Finance Corporation (IFC) has a broad approach to job creation. Between FY01and FY11, youth employment was not specifically targeted, except in the Middle East and North Africa region and in a small number of other interventions. IFC invested $500 million to 50 investment operations and 18 advisory services to education. Although youth employment is addressed in the education, social protection, and labour strategies, it is not recognised as an issue in most country strategies - even where youth unemployment is serious. Youth employment is a multisectoral issue, but few youth employment projects are implemented by multisectoral teams.Evidence on what works in youth employment is scarce. Known factors that contribute to success are a comprehensive approach including participation of the private sector, monitoring and follow up of individual participants, and complementary interventions, such as combined training with job search and placement assistance, rather than isolated interventions. In high-unemployment environments, wage subsidies, skills training, and job search support are of little impact; and demand-side interventions are needed. Strong diagnostics are important to design interventions for youth in low-income areas. The Bank's few impact evaluations on youth employment examine short-term effects, find limited positive results, and do not calculate the cost-effectiveness of interventions. The evaluation makes two recommendations: (i) apply an evidence-based approach to youth employment operations, and (ii) at the country level, take a strategic approach to youth employment by addressing the issue comprehensively, working across World Bank Group teams, with governments and other donors. There is a critical need to strengthen evidence-based feedback loops to the strategic planning process.

This report evaluates the outcomes of World Bank Group support to Liberia from its post-war reengagement in 2003 through 2011. The country has moved from total disarray to a solid foundation for inclusive development. Although development has not moved forward as quickly as hoped, substantial progress has been made. Public finance and key institutions have been rebuilt; crucial transport facilities have been restored; and hospitals, schools, and universities are operating. The debilitating burden of massive external debt has been eliminated. Although the government deserves most of the credit, this success would not have been possible without external development and security partners, including the World Bank Group.Regarding outcomes, the rebuilding of public institutions has seen substantial progress, with important achievements in restoring public finances and reforming the civil service. Regarding the rehabilitation of infrastructure, the World Bank Group has helped improve the conditions of roads, ports, power supply, and water and sanitation. However, World Bank Group financial support has been relatively modest with regard to facilitating growth, but it has helped with policy advice and in filling gaps left by other partners. With regard to the three cross-cutting themes of Bank Group strategy, some effective programmes were carried out, including capacity development at several core public finance-related agencies. However, the integration of these themes across World Bank Group interventions, which was the underlying intent, still needs a vision and better articulated strategy. Finally, the Bank and the International Monetary Fund led efforts to reduce Liberia's inherited external debt burden under the enhanced Highly-Indebted Poor Country Initiative and the Multi-lateral Debt Relief Initiative mechanisms. Most development partners have faced the task of transitioning from support for emergency reconstruction to support for sustained development. This is a significant challenge for the World Bank Group, coming at a time when the dynamism which characterised its emergency support is widely perceived to be abating. Although the evaluation is in broad agreement with the approach of the Liberia programme, two issues merit greater attention: (i) the stewardship of natural resources, including the need to systematically enhance the quality of governance across the value chain of resources- with the overarching goal of sharing the benefits among all Liberians; (ii) the need to create job opportunities, especially among youth, and to address the pervasive unemployment/ underemployment problem. Finally, there is a need to improve the investment climate.

This evaluation is about the nature and magnitude of the cost savings and other benefits of business license simplification in one of the central districts of Lima, Peru. IEG asked whether the project's license simplification reform reduced costs and operating procedures and whether it increased business registration. The project was implemented from 2005 to 2007. Two evaluations done in 2007 and 2008-11 examined, respectively, whether the project led to reductions in time and procedures and whether it led to improved business outcomes. This evaluation reviewed both of those, collected additional data, and drew lessons for future operations.The evidence points to significant reductions in time, monetary costs, and business procedures for businesses that registered to obtain licenses. However, the greater formality of the business environment did not improve the enterprises' access to financing, facilitate investment, or remove invisible barriers to business growth.These results have policy implications for formal business environments. Although there were not large positive effects for enterprise outcomes, enterprise owners and society overall gained through owners spending less time away from their firms to certify and register their firms. Such projects are sometimes promoted as a way to foster dynamic businesses, but the evidence in this report suggests that the more mundane time and cost savings are a significant part of the benefits.These results offer the promise of sharpening the understanding of the circumstances under which reforms may be viewed as a growth engine for a society; they also enable IFC to provide a more focused understanding of reasonable expectations for such projects. Based on these findings, IEG's evaluation offers several recommendations about follow-up evaluations, investment in data collection, and developing a base of evidence to aid in setting expectations for projects.

The World Bank Group has made important contributions to poverty reduction in developing countries. But to stay relevant under the uncertain conditions that characterise today’s global development context, the Bank Group needs to enhance its capacity to help clients cope with weak economic growth, address persistent disparities in development progress, and manage the increasingly global and cross-cutting nature of development solutions. The messages in this report from the Independent Evaluation Group (IEG) seek to help the Bank Group improve its programs and development outcomes. Thus the primary audience is Bank Group management. Additional audiences include other development organisations, nongovernmental organisations, and civil society organisations that are involved in development issues, as they also seek better development outcomes. This report addresses IEG’s work over the last year, summarising findings from its evaluations and discussing the trends that are revealed. In particular, as a consequence of the Bank Group’s rapid, large-scale response to the 2008-09 crisis, the Bank’s remaining capital headroom precludes a comparable expansion should another crisis occur. In addition, the extent to which country programmes meet their objectives has yet to reach the performance target set in the Bank’s Corporate Scorecard. Development outcome ratings of Bank-funded investment projects, as well as the outcome ratings for International Finance Corporation (IFC) investments, have recently declined. IEG’s findings suggest that enhancing the quality of projects at their outset as well as their supervision would help reverse the decline in Bank project ratings; along the same line, improving IFC’s work quality would strengthen the results of its investments. Evaluation evidence also underscores the importance of sustained dialogue with stakeholders and of high-quality analytical work to sharpen the understanding of client circumstances, which is essential for successful outcomes. Effective development solutions require intensified efforts by the Bank Group to work across conventional boundaries.

This report evaluates the outcomes of World Bank Group support to Afghanistan from 2002-11. Despite extremely difficult security conditions, which deteriorated markedly after 2006, the World Bank Group has commendably established and sustained a large programme of support to the country. The key messages of the evaluation are:While World Bank Group strategy has been highly relevant to Afghanistan's situation, beginning in 2006 the strategies could have gone further in adapting ongoing programmes to evolving opportunities and needs, and in programming activities sufficient to achieve the objectives of the pillars in those strategies. Overall, Bank Group assistance has achieved substantial progress toward most of its major objectives, although risks to development outcomes remain high. Impressive results have been achieved in public financial management, public health, telecommunications, and community development; substantial outputs have also been achieved in primary education, rural roads, irrigation, and microfinance-all started during the initial phase. Bank assistance has been critical in developing the mining sector as a potential engine of growth. However, progress has been limited in civil service reform, agriculture, urban development, and private sector development. The Bank Group's direct financial assistance has been augmented effectively by analytic and advisory activities and donor coordination through the Afghanistan Reconstruction Trust Fund. Knowledge services have been an important part of Bank Group support and have demonstrated the value of strategic analytical work, even in areas where the Bank Group may opt out of direct project financing. With the expected reduction of the international presence in 2014, sustainability of development gains remains a major risk because of capacity constraints and inadequate human resources planning on the civilian side. To enhance programme effectiveness, the evaluation recommends that the Bank Group help the government develop a comprehensive, long-term human resources strategy for the civilian sectors; focus on strategic analytical work in sectors that are high priorities for the government; assist in the development of local government institutions and, in the interim, support the development of a viable system for service delivery at subnational levels; assist in transforming the National Solidarity Program into a more sustainable financial and institutional model to consolidate its gains; help strengthen the regulatory environment for private sector investment; and scale up IFC and MIGA support to the private sector.

The development paradigm has shifted toward private investment, and the private sector has become central in development strategies. There is much to be learned about how to effectively facilitate and mobilise private sector contributions to development. Effective monitoring and evaluation (M and E) systems are critical for learning to catalyse private sector development. In line with this advance, the International Finance Corporation and the Multilateral Investment Guarantee Agency are developing and refining their M and E efforts. In this Biennial Report on Operations Evaluation, the Independent Evaluation Group takes stock of the evolution of the M and E systems in the two organisations, assessing their adequacy, coverage, and quality, as well as their respective results measurement systems. IEG acknowledges progress by the two institutions. IFC has advanced its systems for gathering, analysing, and applying project information and has strengthened its coverage of indicators that measure results. Information from M and E has become more prominent in its business decisions. However, the institution’s corporate goals are built on indicators of client reach that cannot be solely attributable to IFC, so there is no credible articulation of IFC’s impact. MIGA has introduced self-evaluation of its projects and started gathering some standard development indicators. As a result, individual learning is taking place in the institution.The report shows the importance of IFC and MIGA managements continuing their efforts to deepen M and E and improve their systems. To gain the full benefit of learning from evidence that M and E brings to light, key areas need improvement. IEG offers recommendations for IFC regarding quality, verification of data, and tracing effects. For MIGA, IEG notes that it needs to adapt and streamline its evaluation approach to fit its business practices.

As part of its strategy to support global trade, the World Bank Group seeks to enhance trade finance in emerging markets. In 2005 the International Finance Corporation (IFC), part of the Bank Group, introduced the Global Trade Finance Program (GTFP) to support the extension of trade finance to underserved clients globally. This IEG evaluation found that overall, the GTFP was a relevant response to the demand to reduce risk in trade finance in emerging markets. The programme significantly improved IFC’s engagement in trade finance by introducing an open network of banks and a quick, flexible response platform to support the supply of trade finance. IEG’s evaluation covers the programme’s operations from its inception in 2005 through FY2012. The programme grew from a $500 million annual commitment to $5 billion in FY12. It accounted for 39 percent of total IFC commitments and has low costs—it accounted for 2.4 percent of IFC’s capital use and 1.2 percent of its staff costs and has had no claims to date. It is profitable as well, although not to the extent originally expected, accounting for 0.6 percent of IFC’s net profit. IEG found that the GTFP has particular additionality among higher-risk countries. In its early years, it was concentrated in these countries, particularly in Africa. During the global crisis, the programme risk-mitigation instrument became relevant in much broader markets. Client feedback on the programme has been positive.In its evaluation IEG does offer several recommendations to enhance its effectiveness, including on issues of transparency and reporting methods, as well as expanding the share of the programme in needier markets. For development professionals, the lessons in this evaluation can be applied to private sector development situations, particularly mitigation of financing risks in emerging markets.

The unanticipated spike in international food prices in 2007–08 hit many developing countries hard. International prices for food and other agricultural products increased by more than 100 percent between early 2007 and mid–2008. Prices for food cereals more than doubled; and those for rice doubled in the space of just a few months. The food price increases were particularly hard on the poor and near–poor in developing countries, many of whom spend a large share of their income on food and have limited means to cope with price shocks. An estimated 1.29 billion people in 2008 lived on less than $1.25 a day, equivalent to 22.4 percent of the developing world population. In addition, the Food and Agriculture Organization estimated that 923 million people were undernourished in 2007. Simulation models suggested that poverty rose by 100–200 million people and the undernourished increased by 63 million in 2008.The World Bank organized rapidly for short-term support in the crisis, launching a fast-track program of loans and grants, the Global Food Crisis Response Program (GFRP). The GFRP mainly targeted low-income countries, and provided detailed policy advice to governments and its own staff on how to respond to the crisis. The Bank also scaled up lending for agriculture and social protection to support the building of medium-term resilience to future food price shocks. The International Finance Corporation responded by sharply increasing access to liquidity for agribusinesses and agricultural traders in the short and medium term, as well as new programs to improve incentives for agricultural market participants.This evaluation assesses the effectiveness of the World Bank Group response in addressing the short-term impacts of the food price crisis and in enhancing the resilience of countries to future shocks.

The unanticipated spike in international food prices in 2007-08 hit many developing countries hard. International prices for food and other agricultural products increased by more than 100 percent between early 2007 and mid-2008. Prices for food cereals more than doubled; and those for rice doubled in the space of just a few months. The food price increases were particularly hard on the poor and near-poor in developing countries, many of whom spend a large share of their income on food and have limited means to cope with price shocks. An estimated 1.29 billion people in 2008 lived on less than $1.25 a day, equivalent to 22.4 percent of the developing world population. In addition, the Food and Agriculture Organization estimated that 923 million people were undernourished in 2007. Simulation models suggested that poverty rose by 100-200 million people and the undernourished increased by 63 million in 2008.The World Bank organised rapidly for short-term support in the crisis, launching a fast-track programme of loans and grants, the Global Food Crisis Response Program (GFRP). The GFRP mainly targeted low-income countries, and provided detailed policy advice to governments and its own staff on how to respond to the crisis. The Bank also scaled up lending for agriculture and social protection to support the building of medium-term resilience to future food price shocks. The International Finance Corporation responded by sharply increasing access to liquidity for agribusinesses and agricultural traders in the short and medium term, as well as new programmes to improve incentives for agricultural market participants.This evaluation assesses the effectiveness of the World Bank Group response in addressing the short-term impacts of the food price crisis and in enhancing the resilience of countries to future shocks.

In economic growth the largest differences between developed and developing economies are in innovation performances. Innovation is critical for growth, but it is increasingly important for addressing major development changes, such as those related to inclusion and sustainability.Recognising this pattern, many countries are promoting innovation and entrepreneurship. Market and government failures and other bottlenecks impede innovation and entrepreneurship, particularly in developing countries. These countries need to build the capacity to find, absorb, and use new technologies and processes as well as foster entrepreneurs who can take risks, look for finance, and bring new products and processes to market.The Independent Evaluation Group reviewed the investment portfolio in innovation and entrepreneurship interventions over the past decade across the World Bank Group. IEG found that this investment is substantial, but its effectiveness can be enhanced through broad, systemic efforts. Urgent action is required to enhance coordination, consultation, and linkages on innovation and entrepreneurship initiatives across networks, sectors, and regions.Another challenge is to develop practical solutions for people who earn less than $2 a day–an issue relevant to middle-income as well as low-income countries. Sustained efforts are required to identify different mechanisms and implementation arrangements that are effective and efficient. Monitoring and evaluation is also important for scale-up of promising interventions and mechanisms to effectively capture and share knowledge within and across the Bank Group.IEG presented a number of recommendations to strengthen the effectiveness of Bank Group support for innovation and entrepreneurship. They involved implementing a strategic framework that considers the new World Bank Group strategy and provides building blocks, examining alternative approaches for financing early-stage start-ups, and promoting knowledge sharing within the Bank Group in numerous ways.Both development and business audiences will be interested in this evaluation: the lessons distilled and examples highlighted can be applied in many business contexts.

IEG's evaluation shows that the World Bank Group remained an important partner for the government in addressing many key policy challenges. The World Bank adapted its program effectively to meet shifting country needs, which shifted to subnational government support in the mid-2000s. The International Finance Corporation (IFC) provided useful advisory support for structuring public-private partnership projects and trade finance during the 2008-09 global financial crisis. The Multilateral Investment Guarantee Agency (MIGA) concentrated its activities on the electricity transmission subsector.IEG rates the overall outcome of the Bank Group program as moderately satisfactory, with some important variability across themes. The Bank Group made significant contributions when it served as an advisor, providing analytical input and exchanging views on relevant policy issues. Advisory support for structuring public-private partnership projects leveraged IFC's global expertise in project financing. The Bank Group's convening power provided diverse stakeholders with a platform to examine issues and trade-offs that cut across organizational boundaries. In addition, the Bank helped reduce deforestation in the Amazon through support for a major expansion of protected areas and indigenous territories, as well as for building the capacity of national and state environmental agencies.Results were less satisfactory in addressing infrastructure bottlenecks, particularly in logistics and the cost of doing business. These areas remained critical constraints to Brazil's growth and a key government concern. A question regarding the overall country strategy is whether the use of a few very large operations with opportunity cost relative to the IBRD exposure limit was appropriate.The strong demand for Bank Group financial and knowledge support in Brazil is likely to continue. To ensure efficient use of operational resources, the Bank Group must maximize its contribution per dollar loaned and per dollar of Bank Group budget resources. IEG recommends that the Bank Group make catalytic impact a major criterion in the design of its future strategy in Brazil. This means that in selecting the programs and projects to support, the emphasis should be on those with benefits beyond the individual intervention.

Fragile and conflict-affected states (FCS) have become an important focus of World Bank Group assistance in recent years as recognition of the linkages between fragility, conflict, violence, and poverty has grown. Addressing issues of recurring conflict and political violence and helping build legitimate and accountable state institutions are central to the Bank Group's poverty reduction mission.This evaluation assesses the relevance and effectiveness of World Bank Group country strategies and assistance programs to FCS. The operationalization of the World Development Report 2011: Conflict, Security, and Development (2011 WDR) is also assessed, to see how the framework has been reflected in subsequent analytical work, country assistance strategies, and the assistance programs. The evaluation framework was derived from the concepts and priorities articulated in recent WDRs, policy papers, and progress reports issued by Bank Group management, to draw lessons from FCS. The framework is organized around the three major themes emerging from the 2011 WDR: building state capacity, building capacity of citizens, and promoting inclusive growth and jobs.The evaluation focuses on International Development Association (IDA)-only countries, which are deemed to have certain characteristics such as very low average income and no access to private finance, making them eligible for special finance tools and programs. As the benchmark for measuring results, Bank Group performance is evaluated in 33 fragile and conflict-affected states against that of 31 IDA-only countries that have never been on the FCS list. Six new country case studies; analyses of Bank Group portfolios; human resources and budget data; secondary analysis of IEG evaluations; background studies including those on aid flows, gender, private sector development, and jobs; and surveys of Bank Group staffs and stakeholders are also included in the evaluation.

The World Bank Group was a principal founding partner of the Global Environment Facility (GEF) in its pilot phase in 1991, and of the restructured GEF in 1994. The Bank plays three different roles in the GEF: (a) as trustee of the GEF and related trust funds, (b) as implementing agency, including the implementation of private-sector GEF projects by the International Finance Corporation (IFC), and (c) as the host organization of the functionally independent GEF secretariat. Focusing primarily on the role of the Bank as an implementing agency, this review documents how the partnership that the GEF and the World Bank Group established in the early 1990s has evolved over time, offers explanations for observed changes, and draws a number of lessons.The review addresses the following issues:The mutual relevance of the World Bank Group and the GEFInter-organizational coordination along the World Bank Group-GEF project cycleThe introduction of the GEF’s resource allocation systems in 2006 and 2010The evolution and effectiveness of the Bank Group’s GEF portfolioCatalytic approaches in the Bank Group-GEF partnership: co-financing, blending, and mainstreamingThe World Bank’s corporate activities as a GEF implementing agency.The principal purposes of this review are (a) to help improve the relevance and effectiveness of the Bank Group’s partnership with the GEF, and (b) to draw lessons for the Bank Group’s partnership with the GEF and other large global partnership programs.

The World Bank Group is currently engaged in reflection and debate on how to improve the delivery of development support. Part of this debate concerns strengthening the knowledge agenda. The findings of this evaluation are particularly relevant because they speak directly to questions that the institution is deliberating. In particular, they address four key aspects of the 'science of delivery': the role of local partners or local knowledge hubs; consultation with clients and other stakeholders in the process of designing knowledge services; delivery of knowledge on issues that are relevant to the client; and improving the way the Bank Group learns from upper-middle-income countries and intermediating this knowledge to other countries.The evaluation assesses knowledge-based activities in nine country programs selected from 48 knowledge-intensive programs supported by the Bank Group. It identifies the factors in the success or failure of those activities as they contribute to policy making or development outcomes. It also identifies areas of strength for the Bank Group as well as areas of weakness or risk. The main objective of the evaluation is to learn lessons from practices in a focus group of high-income and upper-middle-income countries that have knowledge-based programs with the Bank Group. The findings have implications for the Bank Group's knowledge work, including governance and incentives.Over the past 15 years, Bank Group country programs have shifted toward more intensive delivery of knowledge services relative to lending, and this trend is expected to continue. The evaluation was done on economic and sector work and non-lending technical assistance activities selected from a purposive sample of knowledge-intensive country programs. In addition, the evaluation assessed International Finance Corporation Advisory Services for their synergy with the Bank's analytical and advisory activities. The lessons from this evaluation could help leverage the Bank Group's global knowledge to meet the needs of countries that mainly rely on knowledge services and are not pressed for financing.

A central challenge is to level the economic playing field by ensuring dynamic markets; strengthening market-support institutions; and removing constraints to participation. IEG found that financial sector development can have both a pro-growth and pro-poor impact by alleviating SMEs' financing constraints, enabling new entry of firms and entrepreneurs and better resource allocation. Layered on top of this are targeted forms of assistance; these interventions may build on a foundation of more systemic reforms, may come in tandem with them, or may in fact be a means to build systemic reforms from the bottom up.Any credible justification of targeted support to SMEs must be focused on establishing well-functioning markets and institutions, not simply providing a temporary supply of benefits to a small group of firms during a project's lifespan. Thus, targeted interventions need to leverage resources to produce broader benefits for institutions and markets.To make targeted support for SMEs more effective, the World Bank Group needs to do several things:Clarify its approach to targeted support to SMEs.Enhance the support's relevance and additionality.Institute a tailored research agenda.Strengthen guidance and quality control for such support.Reform MIGA's Small Investment Program.

Public-private partnerships (PPPs) have seen a rise in the last two decades and are used in more than 134 developing countries. IEG has reviewed the World Bank Group's work with PPPs and makes several recommendations to enhance their effectiveness.