Showing papers on "Conditionality published in 1986"

Outward Orientation, Import Instability and African Economic Growth: an Empirical Investigation

Abstract: Beleaguered policy-makers in developing countries have become quite tired of generalised advice. The remedies for macroeconomic malaise or stagnation that are appropriate in one country may be quite unsuited to the problems of another. Today’s ‘recipe’ for stabilisation and development in one country may be disastrous in its effects not only in other countries but also at other times in the same country. ‘Norms’ and ‘averages’ for the world, however fascinating to statisticians and development economists, are dubious guides for policy-makers in individual countries. Unhappiness with ‘global’ prescriptions has rarely been as vociferous as it has become in recent years in the context of the ‘conditionality’ attached to IMF, World Bank and other official lending. The IMF and the World Bank usually deny that they employ a single ‘model’ for all their member countries. Whether these institutions, qua institutions, do or do not, there can be little doubt that, within them, generalised prescriptions abound.

Aid, export promotion and the real exchange rate : an African dilemma

Abstract: This paper argues that aid has unwanted side effects that require explicit policy attention. It shows that aid exerts upward pressure on the real exchange rate, leads to increased labor costs in traded goods producing sectors and reduces external competitiveness. If reduced export performance is to be avoided after substantial increases in the volume of aid, explicit policies need to be designed to reduce the conflict between export promotion and aid. Moreover, when traded goods production is characterized by positive 'learning by doing' externalities, increases in aid will permanently reduce productivity in export sectors. If, in addition, capital markets are imperfect, the case for explicit export promotion becomes even stronger. The possibility of a vicious circle is a real one: distortionary anti-export biases in trade policies lead to poor trade performance and lower real income, which makes the country involved a more likely aid recipient; however, increased aid will lead to further deterioration in trade performance and increase the dynamic costs of anti-export policies, while at the same time allowing their continuation. Therefore, the argument presented in this paper presents a strong case for aid conditionality.

The politics of economic liberalization: usaid and the world bank in kenya, 1980-84

Abstract: FOR THE LAST five years or so the Third World as a whole, and the African continent in particular, has been subjected to pressure to allow freer play to market forces. This pressure originally came in the form of words, in particular the words of the World Bank's report of 1981 on Accelerated Development in Sub-Saharan Africa (the 'Berg Report') which asked above all for a lifting of controls on exchange rates and agricultural prices.1 More recently, however, the pressure for liberalization has come with teeth in the form of 'policy conditionality', that is, of refusals by aid donors to disburse development aid unless specific changes in economic policy are made. In the vanguard of this movement are the World Bank themselves and the United States Agency for International Development. This article examines the attempts that have been made over the last four years by these donors to liberalize the economy of one African country, that of Kenya. It will argue that although, in my opinion, both the analysis of the Berg Report and the idea of conditionality have much to recommend them in principle, donors have in practice often insisted on conditions which were loosely related to the objective which they were trying to bring about, have underestimated the political opposition to the conditions they were imposing and as a consequence have frequently failed to get their conditions to stick.

How the IMF lives with its conditionality

Abstract: In spite of the intense controversy associated with the conditionality of its lending, IMF decisions are not voted upon but are the “sense of the meeting” of the Executive Directors as declared by the Managing Director This unusual decisionmaking process is a substitute for secrecy of voting, which is not feasible within the IMF It permits the wealthier countries to impose adjustment conditions without the appearance of the continual exercise of their majority power in the IMF It permits the poorer, developing countries to agree or to disagree without taking an explicit position or to disagree with less danger to the favorable consideration of any future request which might be made