Chinese Contractors and Development Project Quality

This paper tests the hypothesis that the growing proportion of World Bank contracts granted to Chinese firms, particularly in the infrastructure sector, may undermine results by exposing projects to lower standards of work. We find that such concerns are unfounded. We create a dataset of World Bank projects that merges data on contracts under the project and project features and outcomes. We examine the association between contracting features and outcomes including the proportion of contract values awarded to non-borrower firms from major supplier countries. We find that the share of project contract value awarded to Chinese firms is not a correlate with better or worse project outcomes. More broadly, borrower country features explain some variance in outcomes but indicators including sector, year, the proportion of contracts awarded competitively, and the proportion that are for goods or civil works have little explanatory value. This (non-causal) evidence is consistent with the idea that World Bank procurement rules broadly work to ensure poor contracting choices are not a major determinant of project outcomes.