“The World Bank Group considers corruption a major challenge to its twin goals of ending extreme poverty by 2030 and boosting shared prosperity for the poorest 40 percent of people in developing countries.” On its website, the World Bank acknowledges that corruption is one of the main obstacles to development. However, according to a new study, World Bank aid actually fuels corruption: It is no surprise, then, that the World Bank allegedly tried to censor that paper.
In its latest issue, The Economist tied the abrupt resignation of World Bank chief economist Pinelopi (Penny) Goldberg with the story told in the paper Elite Capture of Foreign Aid: Evidence from Offshore Bank Accounts. One of that paper’s three authors, Bob Rijkers, is a World Bank economist. The other two are academics: Jorgen Juel Andersen (BI Norwegian Business School) and Niels Johannesen (University of Copenhagen).
This paper, The Economist writes,
“passed an exacting internal review by other researchers in November. But, according to informed sources, publication was blocked by higher officials.”
Today, Johannesen posted the most recent draft to his personal website. It is not difficult to understand why World Bank executives were upset.
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The implied average leakage is around 7.5 percent: This means that for every $100 of development aid, $7.50 apparently becomes corruption profits, hidden in offshore financial centers.