The Long Term Impacts of Project Aid: Evidence from China

Remarkably little is known about the long-term impacts of project aid to lagging poor areas. The paper re-visits a large World Bank-financed rural development project in southwest China, 10 years after it began and four years after disbursements ended. Survey data were collected on 2,000 households (in both project and non-project villages) who had first been surveyed at project commencement in 1995. A double-difference estimator is used to assess impacts after balancing the initial covariates of placement. We find sizeable gains in mean income during the disbursement period, but much smaller long-term impacts, although there are signs of a lasting reduction in extreme poverty. We also highlight the difficulties in assessing long-term impacts, given spillover effects through spending displacement and knowledge diffusion. Rapid appraisal methods do not reveal any impacts, although recall biases may well be the reason.

At this ODI event, Dr Martin Ravallion, Senior Research Manager in the World Bank's Development Research Group, will present his recent paper which re-visits a large World Bank-financed rural development project in southwest China, ten years after it began and four years after disbursements ended.

Findings include sizeable gains in mean income during the disbursement period compared to much smaller longer-term impacts (although some signs of a lasting reduction in extreme poverty were evident). The paper also covers the difficulties of assessing long-term impacts.