Showing papers on "Conditionality published in 1998"
TL;DR: The authors empirically examined the impact of foreign aid on the recipient's public expenditures, using cross-country samples of annual observations for 1971-90, and found that aid is not fungible at the aggregate level and there is no associated tax relief.
Abstract: The donor community has been increasingly concerned that development assistance intended for crucial social and economic sectors might be used directly or indirectly to fund unproductive military and other expenditures. The link between foreign aid and public spending is not straightforward because some aid may be fungible. This article empirically examines the impact of foreign aid on the recipient's public expenditures, using cross-country samples of annual observations for 1971-90. For the base sample of 14 developing countries, it finds that aid is not fungible at the aggregate level and there is no associated tax relief. Increasing the number of countries, however, makes aid fungible. Moreover, results based on the main sample indicate that aid is fungible in three out of five sectors examined. Developing country governments receiving earmarked concessionary loans for agriculture, education, and energy reduce their own resources going to these sectors and use them elsewhere; only loans to the transport and communication sector are fully spent on the purposes intended by donors. Because most aid appears to be fungible, the rate of return on a specific donor-funded project tells little about the impact of that assistance; a better approach may be to tie foreign aid to an overall public expenditure program that provides adequate resources to crucial sectors.
591 citations
Book•
01 Jan 1998
TL;DR: In this article, the authors look at the effectiveness of conditionality in structural adjustment programs and conclude that conditionality has been counterproductive to price stability, economic growth and investment, and argue that it tends to be coercive and detrimental to development objectives.
Abstract: This volume looks at the effectiveness of conditionality in structural adjustment programmes. Tony Killick charts the emergence of conditionality, and challenges the widely held assumption that it is a co-operative process, arguing that in fact it tends to be coercive and detrimental to development objectives. Through detailed case studies of twenty one recipient countries, he explores the key issues of:
* ownership
* role of agencies
* government objectives and the effects of policy.
The conclusion is that conditionality has been counterproductive to price stability, economic growth and investment.
383 citations
TL;DR: In this article, the authors explore the way in which corruption has been understood in this 'governance' agenda and the efforts that have been made to control it by improving institutional performance and policing.
Abstract: Political corruption ‐ the misuse of public office or public responsibility for private (personal or sectional) gain ‐ has been an important theme of the neo‐liberal policies of adjustment, conditionality and democratization in Africa. Having identified the state as ‘the problem’, and liberalization and democratization as ‘the solution’ to that problem, it was inevitable that efforts to eradicate and control the widespread corruption characterising post‐colonial politics would be given a high priority by ‘the donors’. From the outset, proponents of structural reform linked political corruption to authoritarianism as an explanation of developmental failure, thereby identifying the arguments for democratization and ‘good governance’ with those for liberalization. This paper explores the way in which corruption has been understood in this ‘governance’ agenda and the efforts that have been made to control it by improving institutional performance and policing ‐ greater transparency and accountability, more ef...
184 citations
TL;DR: The recent UK White Paper makes an admirable commitment to the idea of "partnership", as the keystone of a new aid relationship with countries committed to poverty reduction and good governance.
Abstract: The recent UK White Paper makes an admirable commitment to the idea of ‘partnership’, as the keystone of a new aid relationship with countries committed to poverty reduction and good governance. The concept is a difficult one, however, open to multiple interpretation. Genuine participation means joint ownership, with mutual rights and obligations; and it implies a contractual relationship, with procedures for redress in case of default. Other donors, notably the EU, have travelled this road with mixed success and much back-sliding. Can DFID learn from their experience? Can it devise its own institutional innovations to build true partnership? © 1998 John Wiley & Sons, Ltd.
89 citations
TL;DR: Stokke and Uvin this article pointed out that only in very few exceptional instances is it in the national interest of European donor states to promote moral issues such as democracy and respect for human rights.
Abstract: The ending of the Cold War brought new topics on the agenda of the international aid donors. Questions of democracy and human rights were voiced with rising intensity not least by the European IJnion and by individual European countries. However, when it came to implementing the ambitious principles, both the EU and the bilateral donors lacked a 'serious' commitment. This is indicated by European policies towards South Africa, Kenya, Niger and Algeria. The policies of the Europeans towards Africa in the l99Os have primarily been influenced by security concerns and thus by the narrow national interests of individual donors. This is particularly manifest in the case of France which has a dominating position within the development cooperation of the EU. Thus, only in very few exceptional instances is it in the national interest of European donor states to promote moral issues such as democracy and respect for human rights. In the l990s such themes have become little more than the rhetoric of politicians and treaties, just as it was during the Cold War. THE ENDING OF THE Cold War brought new issues to the development debate. The change from the bipolar international system to multipolarity opened the way for introducing several new themes and instruments into international development aid. After 1989, topics such as democracy and human rights were voiced with rising intensity by the donors.l In June 1990, only half a year after the fall of the Berlin Wall, the British Foreign Minister Douglas Hurd gave a speech in which he maintained that economic development and so-called 'good governance' go hand in hand in developing countries. And Hurd continued, 'economic success depends extensively on the existence of an efficient and honest government, on political pluralism and, I would like to add, respect for the law and free and more open economies'. In the same month, the French president Franvois Mitterrand pointed out at a meeting with African heads of state that in Dr Gorm Rye Olsen is a senior research fellow at the Centre for Development Research in Copenhagen. He also teaches international relations and African politics at the University of Copenhagen. 1. O. Stokke ed., Aid and Political Conditionality (Frank Cass, London, 1995), pp. lff. P. Uvin, 'Do as I say, not as I do: The limits of political conditionality', The European 3fournal of De7nelopment Research, 5, 1 (1993), pp. 63ff.
74 citations
TL;DR: The role of NGOs in social service delivery in Latin America and questions some of the assumptions which are often made about their abilities is discussed in this article, where the authors discuss the political implications of this new role for NGOs and conclude that expectations regarding NGO potential for grassroots empowerment have been over-optimistic.
66 citations
TL;DR: A model reflecting the monetary approach to the balance of payments was published in the International Monetary Fund (IMF) in 1957 as discussed by the authors, which integrated monetary, income and balance-of-payments analysis and became the basis of the conditionality applied to IMF credits.
62 citations
TL;DR: In this paper, the authors use political economy analysis to address the issue of non-compliance in policy conditionality, where either governments agree to conditions with little intention of carrying them through, or circumstances change the benefit-cost ratio of compliance.
Abstract: Although widely used by international financial institutions, policy conditionality often fails in the sense that countries do not fully implement it. Up to now most research has focused on the design of conditionality. This paper, however, uses political economy analysis to address the issue of non-compliance. Either governments agree to conditions with little intention of carrying them through, or circumstances change the benefit-cost ratio of compliance. Analysis of these circumstances points to ways in which conditionality might usefully be reformed.
51 citations
TL;DR: This paper focuses on British writers of doctrine as those responsible for driving the debate forward and forging a consensus among leading military powers on humanitarian relief and peace-building processes in Bosnia.
Abstract: An important trend in military doctrine for so-called 'peace support operations' has been to place them on a spectrum that includes coercion and enforcement. This paper focuses on British writers of doctrine as those responsible for driving the debate forward and forging a consensus among leading military powers. Their discourse is combat oriented, a fact reinforced by a trend towards strategic subcontracting to coalitions of the militarily willing and able. At the same time, there has been a move to institutionalise the involvement of military forces in relief, peace building and development activities. The overall emphasis is on stability and security to facilitate the delivery of humanitarian relief and to establish the conditions for peace-building processes. In the case of Bosnia, this involves conditionality and economic leverage. Although there is a long-established record of peace-keeping forces engaging in goodwill activities (with mixed results), the current trends contain contradictions that seem likely to contribute to the widely perceived erosion of classical humanitarian principles. Language: en
49 citations
TL;DR: The concept of partnership has been proposed in the White Paper and in a new Swedish policy document, potentially offering a vision of aid relationships on a more equal footing, with scope for genuine recipient participation as mentioned in this paper.
Abstract: The last decade has seen an increasing disillusionment with aid to Africa. Whilst some have laid the blame for this failure at the door of African governments and their lack of commitment, there is growing recognition that the multiple conditionalities imposed by donors have been part of the problem. The concept of partnership propounded in the White Paper, and in a new Swedish policy document, potentially offers a vision of aid relationships on a more equal footing, with scope for genuine recipient participation. But potential pitfalls lay ahead: problems for recipients in managing multiple partnerships, for donors in finding governments with sufficient capacity and commitment to the shared goals of democracy and poverty eradication to act as genuine partners, and to manage an equal partnership based on the inherently one-sided process of aid budgeting. Time and effort are also required to bring the whole international community into line with the notion of partnership as the basis for aid relations. © 1998 John Wiley & Sons, Ltd.
38 citations
TL;DR: This paper examined the record of the United States government in promoting democratic reform through the manipulation of development aid flows between 1992 and 1996, and found that, contrary to the government's pledges, democratic and democratizing states have not received a greater share of aid.
Abstract: This article examines the record of the United States government in promoting democratic reform through the manipulation of development aid flows between 1992 and 1996. The first section reviews the origins of the policy of political conditionality and the subsequent changes in the US Agency for International Development. The next section evaluates the policy's execution by considering trends in the volume and distribution of US official development assistance, statistical linkages between that aid and recipient democratization, and the relationship with other potential foreign policy goals. The study finds that, contrary to the government's pledges, democratic and democratizing states have not received a greater share of aid. Instead, the distribution has been closely linked with security concerns ‐ a pattern consistent with the cold war record ‐ and US economic self‐interests have also been evident. Finally, three obstacles to the policy of ‘building democracy’ are considered: domestic ambivalence over ...
TL;DR: Carey et al. as discussed by the authors discussed the role of international aid in the restoration of democracy in Burma and discussed the challenges of developing a new political system in the context of ethnic minority issues.
Abstract: Foreword Aung San Suu Kyi - Preface P.Carey - Abbreviations - Notes on the Contributors - Introduction P.Carey - PART 1: POLITICS AND CONSTITUTION MAKING - The National Convention: An Impediment to the Restoration of Democracy J.M.Diller - The Constitutional Future of Myanmar in Comparative Perspective R.H.Taylor - PART 2: FOREIGN POLICY - Burma's Relations with the People's Republic of China: From Delicate Friendship to Genuine Cooperation C-S.Liang - PART 3: VIEWS FROM THE PERIPHERY - Burma's Ethnic Minorities: A Central or Peripheral Problem in the Regional Context? M.Smith - The Civil War, the Minorities and Burma's New Politics J.Silverstein - PART 4: THE CHALLENGES OF DEVELOPMENT - Priorities for Burma's Development: The Role of International Aid D.I.Steinberg - Economic Reform and Political Conditionality in Myanmar P.Cook & M.Minogue - Responding to Myanmar's Silent Emergency: The Urgent Case for International Humanitarian Relief and Development Assistance R.C.Carriere - Suggestions for Further Reading - Glossary - Index
TL;DR: The positive and negative effects of IMF stabilization programs and World Bank structural adjustment programs on the accountability of public expenditure management in Jamaica in the period 1980-1992 are analyzed in this paper.
Abstract: This article analyses the positive and negative effects of IMF stabilization programmes and World Bank structural adjustment programmes on the accountability of public expenditure management in Jamaica in the period 1980–1992. Particular attention is given to the negative accountability effects of IMF budget deficit reduction targets imposed on a Government uncommitted to meeting such targets. Many of the arguments presented in this article relate to expenditure accountability problems more generally and it cannot be proved that IMF conditionality was the sole cause of these problems. It is argued, however, that IMF conditionality contributed. This argument is based on a large number of semi-structured interviews conducted in 1993 with Jamaican bureaucrats, politicians, donors, academics and private sector representatives, many of whom were involved in Jamaica's budget formulation process, and on analysis of the existing literature and data. The conclusion reached is that donor-guided reform programmes have complex and often conflicting impacts on the accountability of the Government's budgetary practices. A major question that arises is the relative importance that donors such as the IMF place on budget conditionality as against accountability. The conclusion based on the Jamaican experience is that the IMF placed greater emphasis on the former. © 1998 John Wiley & Sons, Ltd.
TL;DR: In this article, the causes of the crisis are identified in four different sectors of the Korean economy: the real sector, the banking sector, securities market and the foreign exchange market, and the IMF rescue package is therefore intended to remedy the institutional and structural flaws.
Abstract: Pulling down the curtain on its economic miracle of the last three decades, South Korea suddenly fell into a financial crisis in 1997, and was rescued by the IMF. The causes of the crisis are identified in four different sectors of the Korean economy: the real sector, the banking sector, the securities market and the foreign exchange market. Underlying the numerous causes identified for the crisis is the failure of the very institutions and economic structure that propelled Korea to its economic success, in adapting to emerging changes in domestic and international environments. The IMF rescue package is therefore intended to remedy the institutional and structural flaws. The Korean economy is at a crossroads. If it complies well with the IMF conditionality, the economy will be revitalized based on a firmer institutional and structural foundation within a few years. If, however, Korea fails to do so, it will remain an IMF recidivist. Although it has made substantial progress, Korea still faces se...
Posted Content•
TL;DR: In this article, the authors explore some of the major arguments for and against conditionality in structural adjustment programs and conclude that either way one looks at it, some form of conditionality is unavoidable.
Abstract: It is an open secret that the two Bretton Woods Institutions (BWIs) — the World Bank and the IMF — are the main architects of structural adjustment programs (SAPs) that are prevalent in much of the developing world. The very nature of "conditionality" — the policy strings that the BWIs attach to SAP loans to developing nations — does affect the operations of companies, whether these are publicly-owned or private. Conditionality imposes on the program-country (one with a BWI-inspired SAP in place) such measures as: the adjustment/devaluation of local currencies and/or floating of hitherto fixed exchange rates; the decontrol of internal price systems as well as external and internal trade flows (trade liberalization); removal of legal restrictions on private entrepreneurship; abolition of state enterprises and monopolies in both production and marketing; reforming of banking policy, including interest rate decontrol; cutting the state budget, including the removal of all consumer subsidies and other social expenditures; and reduction in money supply accompanied by a general public sector wage and salary freeze to control inflation. These measures, invariably, affect the operations of companies, as well as the socio-economic welfare of the nation involved. It is not surprising, therefore, that some of the negative impacts of SAPs have led to heavy criticism of both the IMF and the World Bank. Based in part on the author's attendance and presentations at conferences in Africa, Europe and North America (on structural adjustment programs in Africa), this paper explores some of the major arguments for and against "conditionality". It argues that whichever way one looks at it, some form of conditionality in structural adjustment programs is unavoidable. It concludes that there are some sound arguments to be found on both sides of the conditionality debate, most of which — in and of themselves — will be of interest to managers.
01 Jan 1998
TL;DR: The belief that outward-oriented policies "work" has had a very considerable influence on the design and implementation of policy conditionality in the IMF and World Bank as discussed by the authors, and this is an issue which has taxed at least two generations of development economists.
Abstract: Should developing countries follow an inwardly or outwardly orientated trade policy? A simple question which only has a simple answer to the simple-minded! This is an issue which has taxed at least two generations of development economists. It is also an issue which has taxed the multilateral lending agencies for some time. The belief that outward-orientated policies ‘work’ has had a very considerable influence on the design and implementation of policy conditionality in the IMF and World Bank.
TL;DR: In this article, a review of the center-periphery distinction and briefly outlines the forces driving the neo-liberal reform efforts is presented, and the purpose here is to ask whether Neo-Liberal reform has fulfilled its promise or whether it has ushered in an era of reperipherization in Latin America.
Abstract: During recent decades, many Latin American nations have undertaken marketoriented economic reform programs. These reforms have arisen in response to perceived failures of the structuralist-inspired import substitution approach to development of prior decades. Structuralist policies were designed with hopes of narrowing the economic gap between the developed nations at the center of the world trading system and the less developed nations at the periphery. In a sense, neo-liberal reformers promise the same thing. The purpose here is to ask whether neo-liberal reform has fulfilled its promise or whether it has instead ushered in an era of reperipherization in Latin America. The paper begins with a review of the center-periphery distinction and briefly outlines the forces driving the neo-liberal reform efforts.
Book•
01 Jan 1998
TL;DR: The International Economic Association (IEA) has published a survey on the state and development in developing countries as discussed by the authors, focusing on the role of institutions as investments in the development process.
Abstract: The International Economic Association - Acknowledgements - List of Contributors and Participants - Abbreviations and Acronyms - Preface - Introduction S.Borner - PART 1: THE STATE AND DEVELOPMENT - Institutions as Investments R.H.Bates - Some Lessons on the Efficiency of Democracy from a Study of Dictatorship R.Wintrobe - The Economics of Autocracy and Majority Rule: the Invisible Hand and the Use of Force M.Olson & M.McGuire - Causes of Change in Political-Economic Regimes P.Bernholz - PART 2: VOLATILITY, UNCERTAINTY, INSTITUTIONAL INSTABILITY AND GROWTH - Macroeconomic Volatility and Economic Development M.Gavin & R.Hausmann - Political Variables in Growth Regressions A.Brunetti - Political Stability and Economic Stagnation P.Keefer & S.Knack - Political Uncertainty, the Formation of New Activities and Growth J.Aizenman - Does Economic Growth Lead to Political Stability? M.Paldam - PART 3: RENT SEEKING AND CORRUPTION - Corruption and Rent Seeking J.M.Mbaku - Corruption and Countervailing Action in Pakistan M.S.Alam - PART 4: CASE STUDIES: POLICIES, COUNTRIES AND INTERNATIONAL ORGANIZATIONS - Disinflation and Overvaluation R.Dornbusch - Government Policy, Saving and Growth in Latin America V.Corbo - Growth and Political Violence in Northern Ireland, 1920-96 V.Borooah - Donor Conditionality and Policy Reform T.Killick - Institutional Analysis of Technical Cooperation D.Kattermann - PART 5: CONSTITUTIONAL AND ADMINISTRATIVE REFORM - Developing Democracy in Developing Countries B.Frey - Ethnic Rent Seeking, Stability and Institutional Reform in Sub-Sahara Africa M.S.Kimenyi - Healing Sick Institutions R.Klitgaard - PART 6: COMMENTS B.Weder, G.P.Pfeffermann & G.Shepherd
TL;DR: The way of dealing with financial turbulence may have important repercussions on countries within and outside Asia as discussed by the authors, but the risks for the world economy as a whole tend to be underrated so far.
Abstract: Analysts broadly agree on the causes of recent crises in East Asia. Nevertheless, deep controversy exists on appropriate therapy. Especially the International Monetary Fund is under attack. The way of dealing with financial turbulence may have important repercussions on countries within and outside Asia. Risks for the world economy as a whole tend to be underrated so far.
Posted Content•
TL;DR: The way of dealing with financial turbulence may have important repercussions on countries within and outside Asia as mentioned in this paper, but the risks for the world economy as a whole tend to be underrated so far.
Abstract: Analysts broadly agree on the causes of recent crises in East Asia. Nevertheless, deep controversy exists on appropriate therapy. Especially the International Monetary Fund is under attack. The way of dealing with financial turbulence may have important repercussions on countries within and outside Asia. Risks for the world economy as a whole tend to be underrated so far.
Posted Content•
TL;DR: The way of dealing with financial turbulence may have important repercussions on countries within and outside Asia as discussed by the authors, but the risks for the world economy as a whole tend to be underrated so far.
Abstract: Analysts broadly agree on the causes of recent crises in East Asia. Nevertheless, deep controversy exists on appropriate therapy. Especially the International Monetary Fund is under attack. The way of dealing with financial turbulence may have important repercussions on countries within and outside Asia. Risks for the world economy as a whole tend to be underrated so far.
01 Jan 1998
TL;DR: In this paper, the role of the IMF and the World Bank in economic policy-making in post-war Bosnia, after the signing of the Dayton Agreement, is discussed, and the viability of current economic policies and their social impact are discussed.
Abstract: This paper considers the role of the IMF and the World Bank in economic policy-making in post-war Bosnia, after the signing of the Dayton Agreement. The author reviews the political economic and social constraints on policy, the relations between the international financial institutions and the authorities in the region, assesses Bosnia's debt situation, and the problems caused by donor delays in disbursement of funds and the imposition of political conditionality. The viability of current economic policies are discussed, and also their social impact. The complexity of the economic and political situation in Bosnia means that there are no simple answers, and whatever course of action is chosen is likely to raise as many problems as it resolves. Throughout the paper, the author identifies some of the dilemmas facing economic policy-makers.
15 Oct 1998
TL;DR: The authors provided a detailed look at the adjustment experiences of two important regions, examining the role which conditionality played in those experiences, and the role of conditionality in adjustment in South-East Asia and Latin America.
Abstract: In this chapter, the authors provide a detailed look at the adjustment experiences of two important regions, examining the role which conditionality played in those experiences.
There are particular reasons for choosing these regions. There has been remarkably little discussion of adjustment in South-East Asia eventhough it is regarded as possessing very flexible economies. With the exception of Philippines, theirs was a largely silent adjustment and a highly successful too. Latin America is different. Until the early 1980s, many Latin American countries had inflexible policies and economies, resistant to the new doctrines of adjustment (although Chile was an early exception). Over the last decade and a half, however, there has been a major reversal in attitudes to economic management, as well as some recovery in economic fortunes.
01 Jan 1998
TL;DR: The World Bank has significantly increased the political content of its policy advice to borrower countries, with measures to promote political pluralism, administrative accountability and social justice (including respect for human rights, judicial independence, freedom of speech and press activity) introduced alongside more traditional concerns with economic liberalisation in its conditionality requirements as discussed by the authors.
Abstract: The decade since the mid-1980s has marked an increased recognition on the part of development agencies and aid donors that democracy may represent an essential requirement for sustainable and equitable economic development. Recognising that corrupt and unaccountable authoritarian governments often lack the necessary governmental and administrative infrastructure to implement successfully the neoliberal development strategies widely advocated by the ‘Washington Consensus’,2 the World Bank in particular has been a prime mover in arguing that ‘good government’ is a vital prerequisite for economic progress. A consequence of this trend has been that the World Bank has significantly increased the political content of its policy advice to borrower countries, with measures to promote political pluralism, administrative accountability and social justice (including respect for human rights, judicial independence, freedom of speech and press activity) introduced alongside more traditional concerns with economic liberalisation in its conditionality requirements (World Bank, 1992; Lancaster, 1993; Moore, 1993; Osborne, 1993).
Posted Content•
01 Jan 1998
TL;DR: In this paper, a reflection on the issue of Europe, political economy and its history is presented, inspired from the entry into force of the European Monetary Union, which coincides with periods of major transformation of the economies of the Western countries and, in particular, Europe.
Abstract: This paper, inspired from the entry into force of the European Monetary Union, is a reflection on the issue of Europe, political economy and its history. Are recalled a few highlights of economic history and the history of political economy, which coincide with periods of major transformation of the economies of the Western countries and, in particular, Europe. The analysis of the history of economics and the political economists with particular regard to innovation and technological change has allowed us to trace an evolutionary path of the European economy from an agricultural system that turns into an industrial society first and then becomes post-industrial. Finally, from the analysis of the path that led to the definition of the economic and institutional the single currency, What emerges is a positive assessment. But this is subject to some important conditionality regarding the capacity of the future monetary union to meet the real needs of both economic and social rights of citizens of the countries that participate in this challenging project.
01 Jan 1998
TL;DR: In this article, the use by aid donor agencies of conditionality to induce changes in economic policies and institutions is examined. But it appears that donors behave as if their conditionality is highly efficacious, and they have not been able to achieve such results.
Abstract: My focus is on the use by aid donor agencies of conditionality to induce changes in economic policies and institutions. At the most general level, this throws light on whether it is feasible to use donor leverage to overcome weak institutions and anti-reformist governments — whether it is possible to use this as a device for prevailing over domestic political constraints on the adoption of better policies. If this appears to be asking too much, is it at least possible that donor leverage and money will tip the balance within governments between reformers and conservatives? Even failing that kind of decisive influence, conditionality may operate through a different channel: steering governments towards the acceptance of policy change in order to secure the ‘seal of approval’ of the International Monetary Fund (IMF), World Bank and others, and by that means to add to the credibility of their own policies. Can donors act as ‘agencies of external restraint’, adopting the role that Robert Bates argues in Chapter 1 of this volume is being played in some developing countries by private international investors? Can donors’ policy stipulations impinge decisively on domestic policy-making by offering a ‘technology of pre-commitment’? Although donors behave as if their conditionality is highly efficacious, it appears that they have not been able to achieve such results.
30 Jun 1998
TL;DR: The World Bank's non-lending services have supported the reconstruction and recovery of El Salvador as mentioned in this paper, and several high-quality lending operations have been important components of this support.
Abstract: The World Bank's non-lending services--its analytic and advisory services, and its leadership in donor coordination--have supported the reconstruction and recovery of El Salvador. Several high-quality lending operations have been important components of this support. In stabilizing and rebuilding a post-war economy, Bank experience in El Salvador indicates that the scope and complexity of economic structural reforms should match the government's capacity and commitment. The Bank should pursue appropriate conditionality as an expected element through its leadership in aid coordiantion, in its direct policy dialogue, and through its portfolio. The Bank should be prepared to take some risk in supporting innovative pilot activities, such as EDUCO, that have the potential to reform deficiencies in pre-conflict policies and institutions. Micro-insecurity and an inefficient system of justice are two of El Salvador's most serious socio-economic problems. The Bank can stress the need to strengthen the justice and law enforcement systems in its dialogue with the government, and encourage other donors to add their voices to persuade government to move on both issues.