Showing papers on "Conditionality published in 2000"

Foreign Aid and Development: Lessons Learnt and Directions For The Future

Abstract: List of tables List of figures List of Contributors List of Acronyms and abbreviations Preface Foreign aid development: Summary and synthesis Sherman Robinson and Finn Tarp PART I: Major themes 1. The evolution of the development doctrine and the role of foreign aid, 1950-2000 Erik Thorbecke 2. The role of government in economic development Irma Adelman 3. Foreign aid in historical perspective: background and trends Peter Hjertholm and Howard White 4. Aid effectiveness disputed Henrik Hansen and Finn Tarp PART II 5. From project aid to programme assistance Paul Mosley and Marion J. Eeckhout 6. Technical co-operation Channing Arndt 7. Sector programme assistance Ole Molgard Andersen 8. Food aid as an aid instrument: past, present and future Bjorg Colding and Per Pinstrup-Andersen PART III Economic perspectives on aid design 9. Using aid to reduce poverty John Healey and Tony Killick 10. Gender equality and foreign aid Lisa Ann Richey 11. Foreign aid, development and the environment Rasmus Heltberg and Uffe Nielsen 12. Aid and failed reforms: the case of public sector management Elliot J. Berg 13. Foreign aid and private sector development Mads Vaczy Kragh, Jorgen Birk Mortensen, Henrik Schaumburg-Muller and Hans Peter Slente 14. Financial sector aid Jens Kovsted 15. Foreign aid and the macroeconomy Peter Hjertholm, Jytte Laursen and Howard White PART IV Broader issues 16. Foreign aid in the emerging global trade environment Oliver Morrissey 17, Aid and conflict Tony Addison 18. Aid, conditionality and debt in Africa Ravi Kanbur 19. Political economy of foreign aid Raymond F. Hopkins References Index

Lessons from the Asian Crisis

Abstract: This paper provides an asymmetric information analysis of the recent East Asian crisis It then outlines several lessons from this crisis First, there is a strong rationale for an international lender of last resort Second, without appropriate conditionality for this lending, the moral hazard created by operation of an international lender of last resort can promote financial instability Third, although capital flows did contribute to the crisis, they are a symptom rather than an underlying cause of the crisis, suggesting exchange controls are unlikely to be a useful strategy to avoid future crises Fourth, pegged exchange-rate regimes are a dangerous strategy for emerging market countries and make financial crises more likely

Law Enforcement and Transition

Abstract: We present a simple model to analyse law enforcement problems in transition economies. Law enforcement implies coordination problems and multiplicity of equilibria due to a law abidance and a fiscal externality. We analyse two institutional mechanisms for solving the coordination problem. A first mechanism, which we call 'dualism', follows the scenario of Chinese transition where the government keeps direct control over economic resources and where a liberalized non-state sector follows market rules. The second mechanism we put forward is accession to the European Union. We show that accession to the European Union, even without external borrowing, provides a mechanism to eliminate the 'bad' equilibrium, provided the 'accessing' country is small enough relative to the European Union. Interestingly, we show that accession without conditionality is better than with conditionality because conditionality creates a coordination problem of its own that partly annihilates the positive effects of expected accession

Aid, Conditionality, and Debt in Africa

Abstract: The years since the early 1980s have seen an exhaustive, and exhausting, debate on foreign aid, conditionality and debt. The post-WWII consensus on aid flows to fill the investment-savings ‘gap’ in the less developed countries has collapsed, under attack from both the political right and the political left. Closely tied in to this debate were the disagreements on conditionality, and on debt. The Latin American debt crisis of the 1980s launched the arguments for and against debt relief with different degrees of conditionalityboth for the debt relief and for subsequent new flows. But it is in Africa that the current debate finds its centre of gravity. Despite massive foreign aid, with inflows far exceeding debt servicing outflows, and despite much resented conditionality on this aid, Africa has failed to achieve significant progress in the wellbeing of its population. Some lay the blame on Africa’s foreign debt burden. Others on conditionality. But on conditionality, there seems to be a three-cornered fight: between those who believe aid conditionality would work if only it were targeted towards the opening up of markets and rolling back the frontiers of the state, those who believe it would work if only it were targeted towards better allocation of public expenditure and programmes toward the poor, and those who believe that the carrot and stick of aid is powerless in the medium term to shift the domestic political equilibrium in a direction other than the one in which it wants to go.

Development strategies for the next century

Abstract: The lesson of the 20th century is that successful development requires markets underpinned by solid public institutions-institutions that protect property rights, regulate market participants, maintain macroeconomic stability, provide social insurance, and manage conflict. A variety of institutional setups could serve these functions, but any imported blueprints should be filtered through local practice and needs. International rules and the loan conditionality imposed by international financial institutions ought to leave room for development policies to diverge from the dominant orthodoxies. Today's advanced industrial countries owe their success to having developed their own workable models of a mixed economy. Developing nations need to fashion their own brands. Economic development will ultimately derive from homegrown strategies, not imitation of U.S.-style capitalism.

Lessons from the Asian Crisis

Abstract: This paper provides an asymmetric information analysis of the recent East Asian crisis. It then outlines several lessons from this crisis. First, there is a strong rationale for an international lender of last resort. Second, without appropriate conditionality for this lending, the moral hazard created by operation of an international lender of last resort can promote financial instability. Third, although capital flows did contribute to the crisis, they are a symptom rather than an underlying cause of the crisis, suggesting exchange controls are unlikely to be a useful strategy to avoid future crises. Fourth, pegged exchange-rate regimes are a dangerous strategy for emerging market countries and make financial crises more likely.

The World Bank : structure and policies

Abstract: List of figures List of tables List of contributors Acknowledgements Introduction Joseph E. Stiglitz 1. The World Bank: an overview of some major issues Christopher L. Gilbert and David Vines Part I. The World Bank's Structure: The Bank as an Institution: 2. Positioning the World Bank Christopher L. Gilbert, Andrew Powell and David Vines 3. The World Bank and poverty reduction: past, present and future Ravi Kanbur and David Vines 4. Why the World Bank should be involved in development research Lyn Squire 5. The challenges of multilateralism and governance Ngaire Woods Part II. The Effectiveness of World Bank Assistance: 6. The World Bank and structural adjustment: lessons from the 1980s Francisco H. G. Ferreira and Louise C. Keely 7. The implications of foreign aid fungibility for development assistance Shantayanan Devarajan and Vinya Swaroop 8. Aid, growth, the incentive regime and poverty reduction Craig Burnside and David Dollar 9. How policies and institutions affect project performance: microeconomic evidence on aid, policies and investment productivity Jonathan Isham and Daniel Kaufmann 10. Increasing aid effectiveness in Africa? The World Bank and sector investment programmes Stephen Jones 11. The World Bank, conditionality and the Comprehensive Development Framework Raul Hopkins, Andrew Powell, Amlan Roy and Christopher L. Gilbert 12. Conditionality, dependence and coordination: three current debates in aid policy Paul Collier Index.

Welfare rights and responsibilities: Contesting social citizenship

Abstract: Part One: Social scientific accounts: Introduction Philosophical underpinnings Liberalism and communitarianism: the individual citizen and the state Five perspectives on citizenship and welfare Part Two: Welfare service user accounts: Introduction Provision Conditionality Membership Conclusion: Citizenship and welfare: principles and practice.

Positioning the World Bank

Abstract: This article examines the rationale for the World Bank and explores whether its objective is best served by its current mix of activities. We are critical of the Bank's reliance on conditionality, and advocate evolution into a Knowledge Bank, which would lend with few conditions to countries with good policies and good institutions, and would concentrate on the provision of knowledge and technical assistance, rather than lending, in countries where the policy framework is poor. We also advocate an expansion in the Bank's role as a provider of global public goods; we critically examine the Banks role in relation to financial crises.

Good Governance and European Aid The Impact of Political Conditionality

Abstract: This research analyses whether Official Development Assistance (ODA) of Germany, France, the United Kingdom and the European Community/European Union (EC/EU) between 1980 and 1995 rewarded good governance in developing countries, using OLS regressions for three cross-sections over that time period. The results show that good governance, in the form of respect for basic human rights, democratic structures and low military spending, did not play a consistent or prominent role in European aid. The coordination between the European donors however seems to have increased during the first half of the 1990s. France and the UK give more aid to their former colonies, the EC/EU favours ACP countries. The results also indicate that both strategic and economic factors influence ODA distribution, whereas recipient needs receive only limited attention.

R&D Policy in Israel: An Overview and Reassessment

Abstract: The goal of this paper is to provide an overview of R&D policy in Israel, and critically examine the policies currently in place as well as proposals to change them. We review in Part I the various programs of the Office of the Chief Scientist (OCS) of the Ministry of Industry and Trade in Israel, followed by a discussion of studies on the impact of OCS support, and an overview of the rise of the High-Tech sector in Israel with the aid patent data. Part II examines outstanding policy issues and suggestions for reform. It opens with a discussion of allocation schemes for the OCS Grants Program in view of a rigid budget constraint, and an assessment of possible departures from neutrality.' We then examine the payback system, the conditionality of production in Israel, the Magnet' program for the support of generic R&D, and related issues. Next we review the difficulties in setting a policy target for R&D spending, and lastly we ask whether government policy should perhaps be aimed also at the supply side (of the market for R&D personnel), rather than just keep subsidizing the demand side. Clearly, these policy issues are of relevance not just for Israel but for any economy contemplating active government involvement in R&D.

Governance-related conditionalities of the international financial institutions

Abstract: This paper examines the new found enthusiasm for governance-related conditionalities in the International Monetary Fund (IMF) and World Bank lending. This new agenda has focussed in particular on legislative and institution-building efforts by borrowers to increase accountability, transparency, the rule of law, and participation. The paper attempts to document this trend by analyzing a sample of 25 upper-tranche arrangements in 1999. A review of past efforts to impose conditionality in related areas provides a discouraging background to this even more ambitious attempt by the international financial institutions (IFIs) at governmental and social re-engineering. Critical weaknesses in the new agenda are highlighted, particularly the complexity and potential conflicts that follow from a multiplication of goals, and also the distortions and ineffectiveness that result from a narrow focus on borrower governments, to the exclusion of private actors and civil society, who are also part of the problem. A brief account of some alternatives to conditionality, as currently practised, are also examined. Finally, the paper raises some troubling implications of this new agenda for the IFIs themselves, especially with regard to their operational effectiveness, their legitimacy and their fairness.

R&D Policy in Israel: An Overview and Reassessment

Abstract: The goal of this paper is to provide an overview of R&D policy in Israel, and critically examine the policies currently in place as well as proposals to change them. We review in Part I the various programs of the Office of the Chief Scientist (OCS) of the Ministry of Industry and Trade in Israel, followed by a discussion of studies on the impact of OCS support, and an overview of the rise of the High-Tech sector in Israel with the aid patent data. Part II examines outstanding policy issues and suggestions for reform. It opens with a discussion of allocation schemes for the OCS Grants Program in view of a rigid budget constraint, and an assessment of possible departures from neutrality.' We then examine the payback system, the conditionality of production in Israel, the Magnet' program for the support of generic R&D, and related issues. Next we review the difficulties in setting a policy target for R&D spending, and lastly we ask whether government policy should perhaps be aimed also at the supply side (of the market for R&D personnel), rather than just keep subsidizing the demand side. Clearly, these policy issues are of relevance not just for Israel but for any economy contemplating active government involvement in R&D.

Brave New Words? A Critique of Stiglitz’s World Bank Rethink

Abstract: While in the position of Chief Economist of the World Bank, Joseph Stiglitz produced a string of papers, one of which proposed moving beyond the ‘Washington consensus’ to a ‘new development paradigm’, which he hoped the World Bank would espouse. This article offers a critique of that paper and the premises underlying any attempt to reposition an international banking agency. In particular, it focuses on Stiglitz’s attempt to jettison ‘conditionality’ and his argument that developmental assistance should seek to foster socio-economic transformation and not be about ‘projects’. It also considers the ramifications of the call to make the World Bank ‘the knowledge bank’. Finally, it highlights what is missing from the proposed paradigm, bearing in mind the World Bank’s new ‘holistic development framework’.

Compliance with IMF Program Indicators and Growth in Transition Economies

Abstract: This paper makes use of the IMF’s Database for Monitoring Fund Arrangements (MONA) to investigate whether transition countries that more successfully implement the conditionality of IMF programs tend to show a better performance on recovery and growth. It is not possible to determine a clear-cut relationship between the index that determines the level of compliance with structural benchmarks in IMF programs and growth. However, the paper finds a definite, positive relationship between the index of compliance with performance criteria and growth, even after controlling for the extent of stabilization of the transition countries.

Does Foreign Aid Promote Democracy

Abstract: Aid potentially can contribute to democratization in several ways: (1) through technical assistance focusing on electoral processes, the strengthening of legislatures and judiciaries as checks on executive power, and the promotion of civil society organizations, including a free press; (2) through conditionality; and (3) by improving education and increasing per capita incomes, which research shows are conducive to democratization. This study provides a multivariate analysis of the impact of aid on democratization in a large sample of recipient nations over the 1975-96 period. Using several alternative democracy indexes and measures of aid intensity, no evidence is found that aid promotes democracy. This result is robust to alternative model specifications and estimation techniques, including the use of exogenous instruments for aid.

The Bail-In Problem: Systematic Goals, Ad Hoc Means

Abstract: In this paper we analyse the recent efforts of the international financial institutions to limit the moral hazard created by their assistance to crisis countries We question the wisdom of the case-by-case approach taken in Pakistan, Ecuador, Romania and Ukraine We show that because default and restructuring are so painful and costly, it is simply not time consistent for the IFIs to plan to stand aside if the markets refuse to roll over maturing claims, restructure problem debts, or provide new money Because these realities create an incentive to disburse even if investors fail to comply, the IFIs are then placed in the position of having to back down on their previous conditionality, which undermines their credibility And since investors are aware of these facts, their behaviour is unlikely to be modified by the IFIs' less-than-credible statements of intent Hence, this approach to 'bailing in the private sector' will not work Fortunately, there is an alternative: introducing collective-action clauses into loan agreements This, and not ad hoc efforts to bail in the private sector, is the forward-looking solution to the moral hazard problem

Compliance with IMF Program Indicators and Growth in Transition Economies

Abstract: This paper makes use of the IMF's Database for Monitoring Fund Arrangements (MONA) to investigate whether transition countries that more successfully implement the conditionality of IMF programs tend to show a better performance on recovery and growth. It is not possible to determine a clear-cut relationship between the index that determines the level of compliance with structural benchmarks in IMF programs and growth. However, the paper finds a definite, positive relationship between the index of compliance with performance criteria and growth, even after controlling for the extent of stabilization of the transition countries.

Ownership and conditionality

Abstract: This paper supports the 1999 Annual Review of Development Effectiveness (ARDE), by providing in-depth review of evaluation, and research findings that assess the relevance of the Comprehensive Development Framework (CDF) principles, and constraints, as well as promising approaches to their implementation. The appropriate form, and role for policy conditionality within the CDF is discussed, proposing a broader view to conditionality than traditionally taken by the Bank, enabling agencies to support the country's motivation for reform, according to political economy considerations, and genuine local learning. It views conditionality as a commitment technique, and as part of an evolving process, bearing the relationship between conditionality and ownership, including participatory roles, and the Bank's ability to assess, and broaden ownership. Four conditionality scenarios are laid out, from ex-post tranching for established reformers, to floating tranching for credible reformers just establishing a track record. These scenarios also include an experimental single up-front tranche for new, or less credible reformers, but with a continued Bank engagement through advisory, and technical assistance. Although such scenarios will not include adjustment lending, adaptable conditionality will facilitate progress, to reshape conditionality as an instrument of mutual commitment.

The international monetary fund in historical perspective

Abstract: The International Monetary Fund was set up in 1944 in a context of war, with the memories of hyperinflation, depression, and fluctuating exchange rates still fresh. The institution - though never exempt from criticism - has arguably served the international community well over the years, demonstrating a tremendous ability to adjust to new economic circumstances. Despite the abandonment of the par value regime in the 1970s, the importance of the IMF has remained undiminished. The IMF played a leading role in the sovereign debt restructuring of the LDC countries in the 1980s, in the transition to a market economy of formerly communist countries in the early 1990s, and in the resolution of financial crises in Mexico and Asia in the mid- to late 1990s, though its handling of such crises has been the subject of much controversy. This paper provides a historical primer on the IMF and considers some of the challenges the institution faces as we enter the twenty-first century. In particular, it questions the wisdom of granting the IMF a formal international lender of last resort role; it suggests that surveillance be extended beyond macro-economic policies to [micro] prudential financial supervision; and surveys the evolution and 'relaxation' of conditionality over the years.

When is Foreign Aid Policy Credible? Aid Dependence and Conditionality

Abstract: Disbursements of foreign aid are guided (in part) by the needs of the poor. Anticipating this, recipients have little incentive to improve the welfare of the poor. In principle, conditionality could partly solve the problem, but this requires a strong commitment ability by the donor. Without such a commitment technology, aid will be allocated (partly) to those in most need, and the recipient governments will exert low effort in alleviating poverty. Contrary to conventional wisdom in the aid literature, we show that tied project aid and delegation of part of the aid budget to an (international) agency with less aversion to poverty improve welfare of the poor in the recipient countries. Keyword: Aid Policy, Credibility, Policy Design

Technologies of Empire: IMF Conditionality and the Reinscription of the North/South Divide

Abstract: This article seeks to complicate conventional understandings of the way in which IMF conditionality operates in relation to North/South relations. It begins with a genealogy of how the Fund became involved in lending to the South and argues that the Fund was transformed from an essentially monetary institution concerned with the industrialised states to a surveillance organisation directed at providing information about the South to the North. The article then explores what discursive functions the Fund might be performing in the context of the relationship between North and South. In this regard the author identifies two major themes underlying IMF discourse, both of which suggest that an underlying sense of danger of the South is felt by the North, and that this sense of danger replicates older fears. The author then argues that the discursive practices employed to address these fears resonate with older discursive strategies and considers why the reoccurrence of these “technologies of empire” might be problematic. It concludes with some (tentative) suggestions about how we might productively disrupt the colonial continuum of which these discursive practices seem to form part. There is a disturbing tendency in the Western Academy today to divorce the study of discursive forms from the study of other institutional forms, and the study of literary discourses from the mundane discourses of bureaucracies, armies, private corporations, and nonstate social organizations. […] [I]f the postcolony is in part a discursive formation, it is also true that discursivity has become too exclusively the sign and space of the colony and the postcolony in contemporary cultural studies. To widen the sense of what counts as discourse demands a corresponding widening of the sphere of the postcolony, to extend it beyond the geographical spaces of the former colonial world.