This article examines how international institutions influence domestic political reforms. Focusing on the World Bank's loans program, it finds that transitioning from borrower to lender status incentivizes countries to improve their human rights and democratic practices.
Loan Eligibility Trigger:
The study employs a regression discontinuity design (RDD) methodology. It demonstrates that reaching specific economic development thresholds motivates governments.
Reform Motivation:
Member states actively pursue graduation due to the perceived prestige associated with lender status membership within this elite group.
Elite Group Benefits:
Improved borrower performance suggests they anticipate significant international recognition and domestic legitimacy from becoming part of the World Bank's lending community. This strategic behavior appears linked to broader political liberalization goals.
