The ongoing financial crisis has raised questions about the underpinnings of development assistance and the role of international financial institutions. A new development assistance framework, grounded in partnership, is emerging. That is the backdrop for this year's review, which--as in past years--tracks the World Bank's operational performance based on the findings of recent evaluations. After the backdrop provided in chapter one, the chapters that follow review recent evidence about the Bank's development effectiveness. Chapter 2 describes project and sector performance trends. Chapter 3 considers recent evaluation lessons at the country level. It draws on OED's (Operations Evaluation Department) country assistance evaluations to help draw out the lessons of the ongoing crisis. Chapter 4 draws lessons that can be inferred from thematic studies. The final chapter discusses the implications for Bank operations and evaluation.

This Annual Review of Development Effectiveness (ARDE) builds on previous reviews, i.e., the 1998 review, released in a hostile environment of financial crisis, concluded that improvements in project performance cannot be enough, that improvements at a higher plane of program, and country performance should also be present; and, the 1999 review, inscribed within the Comprehensive Development Framework dilemmas, and challenges, identified practices for dealing with those challenges, namely to be based on country commitments to poverty reduction, and sustainable growth. The ARDE 2000 finds that progress was solid on a broad front, but that further progress is likely. Portfolio performance is likely to exceed the Strategic Compact target of seventy five percent satisfactory outcomes; and, sustainability, and institutional development ratings reflect improvements. Though progress is commendable, this review examines four tensions the Bank faces: learning to reconcile client, and corporate priorities; adapting global prescriptions to local conditions; balancing country performance and poverty incidence in allocating its resources; and, achieving efficiency/selectivity, seeking to implement a holistic vision of development. Bank strategies should acknowledge client needs, judicious adaptation to institutional, social, and political fronts should be pursued, and, an approach to poor-performing countries should be addressed.

This is the fifth annual review which explores long-term development effectiveness trends and analyses the choice of lending and non-lending instruments and activities to achieve World Bank development objectives. The 2001 review confirms a significant improvement in the outcomes of the Banks lending performance. It finds that selecting the right combination and sequence of activities for a particular objective can make the difference between success and failure, whether at individual project level, for country assistance programmes or for global, sectoral and thematic priorities. At each level, there is unexploited potential to maximise strategic selectivity, and this is especially important in countries with a poor policy framework or acute institutional development needs.

Evaluation is a key tool in improving the quality and effectiveness of development co-operation. The Development Assistance Committee (DAC) Working Party in Aid Evaluation is the only international forum where bilateral and multilateral evaluation ...

The 2004 Annual Review of Development Effectiveness looks at the recent growth and poverty reduction experience of client countries. It assesses the extent to which Bank interventions have contributed to growth and poverty reduction and the effectiveness of different types of interventions. The review uses the key elements of the Bank's 2001 poverty reduction strategy to examine the extent to which these elements respond to the needs of the poor, are actually being carried out, and are having an impact.

ARDE 2003 examines the effectiveness of Bank support for developing country policy reform,. It finds that Bank support has contributed to reform in a number of cases. But there are also cases where the Bank's support has not been associated with improvements in the policy environment.