Showing papers on "Conditionality published in 2002"

Aid and Reform in Africa : Lessons from Ten Case Studies

Abstract: Winner of Choice magazine's Outstanding Academic Title award! Since the early 1980s, virtually every African country has received large amounts of aid to stimulate policy reform. The results have varied enormously. Ghana and Uganda were successful reformers that grew rapidly and reduced poverty. Ethiopia and Cote d'Ivoire have shown significant reform in recent years, but it remains to be seen whether it will be sustainable. 'Aid and Reform in Africa' summarizes the findings from case studies that investigate whether, when, and how foreign aid has affected economic policy in Africa. The main findings are: Policy formation is primarily driven by domestic political economy. Large amounts of aid to countries with poor policies sustain those policies. Overall, donors have not discriminated effectively among different countries and different phases of the reform process. The book concludes that donors have three basic instruments that they can use to encourage adoption of good economic policies in developing countries: money, conditionality, and technical assistance/policy dialog. The case studies in this project show examples in which each of these instruments helped countries' improve their policies."

Europeanisation Goes East: Power and Uncertainty in the EU Accession Process

Abstract: This paper sets out a framework for extending the study of Europeanisation in the existing European Union to the effects of the EU in central and eastern Europe. It starts with the prima facie case that the effects on public policy are similar in nature to those observed in the current EU-15, but broader and deeper in scope. The applicants are taking on all the obligations of EU membership, so the domestic effects of transferring policies and institutions to them are likely to be comparable with the effects of the EU on its current member-states, even though the political relationship is different. Europeanisation mechanisms identified in the literature on the EU also operate in the applicant countries, given that they are subject to substantially the same pressures for adaptation. However, there are two major differences: the first is the wider scope of the EU’s agenda in the candidate countries, which goes far beyond the requirements of membership for the existing member states. The second is the political context of a power relationship between the EU and the candidates that is based on conditionality for accession. The asymmetry of power between the applicants and the Union gives the EU more coercive routes of influence in the applicants’ domestic policy-making processes than in the existing EU because the applicants face additional conditions that current members do not. But there are also constraints on how the EU uses its potential influence in the applicant countries, in particular the multiple dimensions of uncertainty built into the accession process. Heather Grabbe Centre for European Reform 29 Tufton Street London, SW1P 3QL United Kingdom Tel: 020-7233-1199 Fax: 020-7233-1117 heather@cer.org.uk

Participation and Development: Perspectives from the Comprehensive Development Paradigm

Abstract: This paper investigates the relationship between economic and social development. Contrary to the view of those who believe in the existence of a tradeoff between democracy and growth, the paper contends that consensus-building, open dialog and the promotion of an active civil society are key ingredients to longterm sustainable development. Development is a participatory process. “Best practices” or reforms that are imposed on a country through conditionality may very well fail to produce lasting change. They will tend to undermine people’s incentives to develop their own capacities and weaken their confidence in using their own intelligence. Success in a knowledge-based economy requires a highly-educated citizenry, involved in the process of shaping and adapting ideas and policies. Participation and democracy in turn call for greater transparency and accountability in both the corporate and government sectors.

Enlargement, Institution-Building and the EU's Administrative Capacity Requirement

Abstract: Does the EU governance of the Central and Eastern European candidate states unleash a process of Europeanisation? It is argued here that the current enlargement has generated its own mode of governance, characterised by asymmetry and conditionality. Enlargement governance has recently focused on developing administrative capacity or 'institution-building', defined as the creation of institutions necessary for the adoption and implementation of the acquis communautaire. This article examines horizontal administrative reform and attempts to define the conditions determining the success or failure of the EU's efforts in institution-building. The absence of common EU rules and norms, and the variation of domestic preferences about administrative reform, lead to varying degrees of success in administrative institution-building.

Conditionality and Ownership in IMF Lending: A Political Economy Approach

Abstract: The relation between IMF conditionality and country ownership of assistance programs is considered from a political economy perspective, focusing on the question of why conditionality is needed if it is in a country’s best interests to undertake the reform program. It is argued that heterogeneity of interests must form the basis of any discussion of conditionality and ownership. The Paper stresses a conflict between a reformist government and domestic interest groups that oppose reform, leading to a distinction between government and country ownership of a program. A model of lending and policy reform is presented that illustrates the effects of unconditional and conditional assistance first without and then with political constraints. It is shown that conditionality can play a key role even when the Fund and authorities agree on the goals of an assistance program.

European Union Conditionality and the Acquis Communautaire

Abstract: The EU'S conditions for the central and east European applicants look deceptively straightforward: they comprise stable democracy, a competitive market economy, and the capacity to implement EU laws and policies (the so called acquis communautaire). However, they are very general and not amenable to quantitative assessment, leaving ambiguity about exactly when they have been met. This ambiguity increases the EU'S power in accession negotiations, but the accompanying uncertainty diffuses its influence in shaping institutional and policy choices. This article examines the EU'S accession conditionality levers and the constraints on their use. It concludes that readiness for membership depends not only on technical progress in negotiations, but also on when the current member-states are politically ready for enlargement.

The European Union and the Third World

Abstract: Introduction: Setting the Context Four Decades of African, Caribbean and Pacific Relations Latin America and Asia Decision-making and Reforming Institutional Structures Complementarity and Conditionality: Evaluating Good Governance Regimes, Trade and Trading Relations The 1996-2000 Reform Process The Cotonou Partnership Agreement Further Challenges: Implementing Cotonou and 'Everything But Arms' Conclusion: Development and Integration Bibliography Index

Conditionality and Ownership in IMF Lending: A Political Economy Approach

Abstract: The relation between IMF conditionality and country ownership of assistance programs is considered from a political economy perspective, focusing on the question of why conditionality is needed if it is in a country’s best interests to undertake the reform program. It is argued that heterogeneity of interests must form the basis of any discussion of conditionality and ownership. The paper stresses a conflict between a reformist government and domestic interest groups that oppose reform, leading to a distinction between government and country ownership of a program. A model of lending and policy reform is presented that illustrates the effects of unconditional and conditional assistance first without and then with political constraints. It is shown that conditionality can play a key role even when the Fund and authorities agree on the goals of an assistance program.

Middle East and North Africa

Abstract: The incidence of grand corruption in the Middle East and North Africa (MENA) declined in 2001–02 owing simply to reduced opportunities for ‘commissions’ as a result of an economic recession. Global slowdown, reduced investment in emerging markets and a fall in oil prices resulted in declining capital investment and a slump in construction and arms procurement.1 With the decline in real income, however, petty corruption was on the rise. Corruption among senior state officials and politicians was still considered rampant throughout the region. International efforts to curb corruption in the MENA region were hampered during the year by concerns about security, with ‘good governance’ conditionality rarely applied with great effect. Governments trumpeted the anti-corruption cause, but initiatives to curb corruption generally lacked sincerity. In a widespread climate of authoritarian rule, the root causes of corruption have failed to be addressed. Anti-corruption strategies are unlikely to achieve greater success in the future without the initiation of far-reaching political reform. Numerous corruption cases were brought to the public’s attention in 2001–02, but they were usually driven by a government’s need to improve its image or settle political scores, and did not signify real structural change. Civil society anti-corruption initiatives rarely translated into tangible change owing to the low levels of civil rights, freedom of expression and political participation that are prevalent throughout the region. Nevertheless, public opinion surveys suggest increasing public concern about corruption, and several NGOs across the region have focused on the issue. The MENA business community also indicated its concern about corruption, particularly because of its impact on foreign direct investment in the region. It is, however, often difficult to separate private sector venality from that in the public domain, given the intimate links between the family networks that hold power and the principal business interests in the region.

The EU's Approach to Human Rights Conditionality in Practice

Abstract: Introduction. Part I: Introductory Aspects. I. The Legal Framework of EC External Relations. II. Evolution of the Human Rights Policy in the EU/EC External Relations. III. Approaching Conditionally. Part II: Conditionality Ex Ante. IV. Conditionality in Relation to European Countries. V. Conditionality in Relation to Third (non-European) Countries. Part III: Conditionality Ex-Post. VI. The Human Rights Clauses in Bilateral Agreements. VII. Legal Basis, Interpretation and Scope of the Human Rights Clauses. VIII. The Human Rights Clause as an Obstacle to the Agreement. IX. Application of the Human Rights Clauses in Bilateral Agreements. X. Human Rights Clauses in Financial (Unilateral) Regulations. Conclusions. Index.

The Effectiveness of Policy Conditionality: Eight Country Experiences

Abstract: This article analyses the effectiveness of the setting of policy conditions in exchange for aid. Given the emerging consensus that this process is not effective, this article focuses on explaining why not. In analysing the experiences of eight countries — Bangladesh, Cape Verde, Mozambique, Nicaragua, Tanzania, Uganda, Vietnam and Zambia — an ‘augmented’ principal–agent framework proved valuable in explaining why policy conditionality is not effective in these countries. The article concludes that donors should focus on some simple policy outcomes (ex post) instead of extensive policy conditions (ex ante).

Plus ca change …the world bank global education policy and the post-washington consensus

Abstract: For the last two decades the World Bank (WB) has increased its economic and ideological influence in setting the educational policy agenda of the so-called less developed countries (LDC). The economic crisis of two poor regions of the world in the 1980s (Sub-Saharan Africa and Latin America), the reduction of bilateral forms of educational aid, and the economic and political protagonism of the WB through Structural Adjustment Programmes (SAPs), and loan conditionality have been important factors in locating the WB as a real subject of the educational globalization process. Since the 1990s, however, the WB hegemony in the economic, social and educational policies for development has been challenged by the evident failure of SAPS as a mechanism for achieving economic growth and the involvement of LDC in the global economy. In the educational field, direct and indirect effects of WB policies have had a negative impact on a number of indicators, while hitting especially the poorest sectors of society. Some au...

Aid Conditionality as a Tool for Peacebuilding: Opportunities and Constraints

Abstract: Over the past decade, aid donors have pledged billions of dollars to support peacebuilding efforts in collapsed states and war–torn societies. Peace conditionality — the use of formal performance criteria and informal policy dialogue to encourage the implementation of peace accords and the consolidation of peace — could make aid a more effective tool for building peace. In Bosnia, for example, donors have attempted to link aid to the protection of human rights, co–operation with the international war crimes tribunal, and the right of people displaced by ‘ethnic cleansing’ to return to their homes. Yet the conventional practices and priorities of aid donors pose constraints to the exercise of peace conditionality. This article examines several of these constraints, including the reluctance of donors (particularly the international financial institutions) to acknowledge responsibility for the political repercussions of aid; the competing foreign–policy objectives of donor governments; the humanitarian imperative to aid people whose lives are at risk; and the incentive structures and institutional cultures of donor agencies.

IMF Structural Conditionality: How Much Is Too Much?

Abstract: As suggested above, an active debate has long been underway - and has intensified in the wake of the Asian crisis - about the appropriate scope and intrusiveness of IMF policy conditionality. In this paper, I take up one key element of that debate, namely, the role of structural policies in IMF-supported adjustment programs. By "structural policies," I mean policies aimed not at the management of aggregate demand but rather at either improving the efficiency of resource use and/or increasing the economy's productive capacity. Structural policies are usually aimed at reducing/dismantling government - imposed distortions or putting in place various institutional features of a modern market economy. Such structural policies include, inter alia: financial-sector policies; liberalization of trade, capital markets, and of the exchange rate system; privatization and public enterprise policies; tax and expenditure policies (apart from the overall fiscal stance); labor market policies; pricing and marketing policies; transparency and disclosure policies; poverty-reduction and social safety-net policies; pension policies; corporate governance policies (including anti-corruption measures); and environmental policies. To set the stage for what follows, it is worth summarizing the main concerns and criticisms that have been expressed about the IMF's existing approach to structural policy conditionality. These typically take one or more of the following forms. First, there is a worry that wide-ranging and micro-managed structural policy recommendations will be viewed by developing-country borrowers as so costly and intrusive as to discourage unduly the demand for Fund assistance during crises. Even though the cost of borrowing from the Fund (the so-called rate of charge) is much lower than the cost of borrowing from private creditors - particularly during times of stress - we observe that developing countries usually come to the Fund "late in the day" when their balance-of-payments problems are already severe. This suggests that developing countries place a non-trivial shadow price on the policy conditions associated with Fund borrowing. The concern is that if these conditions become too onerous, emerging economies will wait even longer to come to the Fund (as Thailand did in 1997) and/or will turn to regional official crisis lenders that offer easier policy conditionality (e.g., in 1998 Malaysia was one of the first beneficiaries of low-conditionality Miyazawa Initiative funds, and Asian countries could eventually decide to elevate the infant Chiang-Mai swap arrangements into a full-fledged Asian Monetary Fund). The outcome - so the argument goes - would then be even more difficult initial crisis conditions, greater resort to the anti-social behavior that the Fund was established to prevent, and a tendency toward Gresham's Law of conditionality (where weak regional conditionality would drive out not only the unnecessary but also the necessary elements of Fund conditionality).

Investing in Peace: Aid and Conditionality after Civil Wars

Abstract: INTRODUCTION Peace conditionality The argument in brief 1. Aid for Peace? Trial and error in Bosnia Aid-for-peace bargains 2. The Internal Politics of External Existence The intersection of economics and politics Aid and power in Cambodia Striking the balance 3. Peace Dividends: Aid and Fiscal Policy Paying for peace in El Salvador Fiscal targets in the Guatemalan peace accords Fiscal policies for building peace 4. The Humanitarian Dilemma The specre of the well-fed dead Smart aid Humanitarian exemptions 5. Obstacles to Peace Conditionality Competing 'national interests' Reforming donor agencies Whose sovereignty? CONCLUSION NOTES

The Political Foundations of Post-communist Regimes: Marketization, Agrarian Legacies, or International Influences

Abstract: This article explores the causes of differing post-communist regime transitions in Eastern Europe and the former Soviet Union, emphasizing the increasingly prominent thesis that economic liberalization promotes political democratization. We explore this argument in light of findings from other regions that have emphasized modernization, agrarian class structure, and international influences. Our results are based on a multilevel design strategy, first analyzing data on 26 post-communist countries over a 7-to 9-year period using time-series/cross-sectional methods and then turning to a comparative analysis of four purposively selected cases to explore the causal mechanisms implied but not tested in the quantitative analysis. Our results suggest that faith in economic liberalization as a cause of democratization may be misplaced. However, there is support for the notion that large agrarian sectors are unfavorable to democratic development, whereas positive democratic conditionality from outside agents can p...

The European Union's Democratic Conditionality and Domestic Politics in Slovakia: The Me ) iar and Dzurinda Governments Compared

Abstract: THE PROCESS OF MONITORING CANDIDATE COUNTRIES for EU membership has in the past decade become much stricter than ever before, compared with previous enlargements, in terms not only of the scope but also the specificity of conditionality demands. This is evident with respect to both economic and political conditions, but it is the latter which is particularly visible and which has a wider significance for European integration. For the EU has moved resolutely down the path of high as well as low politics and, thereby, into areas traditionally regarded as internal to states. This is demonstrated most recently by the debate, and also controversy, over a formal commitment on human rights. It is also clear that the EU has moved beyond conditions of formal democracy to those pertaining to substantive democracy or qualitative conditions such as the role of political parties and political participation, the independence of the media and an active civil society as well as human and minority rights.' While there has been a general growth of conditionality on the part of international organisations (IOs) in the 1990s, the EU has been at the forefront in pushing both the political and economic versions of this. Some other IOs have been advocates of particular aspects of substantive democracy, like the Council of Europe (COE) over human rights and the Organisation for Security and Cooperation in Europe (OSCE) over minority rights as well as fair and free elections, while others, like NATO, have remained committed to more formal requirements (in its case, civilian control over the military and the existence of a constitutional state). The EU, however, has developed an ever more extensive portfolio of conditionality demands and increasingly so in recent years. It has elaborated on and added to the original Copenhagen criteria set out in 1993.2 The reasons for this trend are several-the end of the Cold War and hence of the predominance of security concerns over democracy promotion; the EU's own political dynamic in a federalising direction; and, in particular, the awareness in Brussels of the various problems of accommodating so many still unconsolidated new democracies from Central and Eastern Europe (CEE) with their communist legacies.

Theories, rhetoric and practice: recovering the capacities of war-torn societies

Abstract: As international attention focuses on the rebuilding of Afghanistan, this paper looks critically at the evolution and meaning of the core concepts underpinning aims and strategies for recovery: the key role of institutional development and capacity building in establishing good governance based on collaboration between state, civil society and market; the empirical consensus, over many decades, for best practice in development; the acknowledgement that recovery of war-torn societies is a development challenge. It is shown that, despite this understanding, operational practice continues to contradict the principles and lessons learned from proven experience. The financial and administrative culture of the international institutions, lack of political will, donor conditionality and recipients' contrary agendas are seen to contribute to this failure. The paper concludes by examining the implications of this analysis for the recovery of Afghanistan.

Government Support for Commercial R&D: Lessons from the Israeli Experience

Abstract: Israel constitutes an interesting "laboratory case" of government intervention in the realm of R&D policy. The recognized scientific and technological prowess of the country was leveraged by extensive government support for commercial R&D projects. R&D policies proved to be highly responsive to changing circumstances, instituting innovative programs such as a government-sponsored fund that jump-started the venture capital market, the technological Incubators program, a program for the support of generic projects conducted by consortia of firms and academia, etc. The Israeli high-tech sector has grown remarkably fast since the mid-1980s, and it is quite likely that government policies significantly contributed to its success. In this paper we review in detail these policies as well as the challenges that confront them: the design of alternative allocation schemes for R&D grants in view of a rigid budget constraint, possible ways of departing from neutrality, the conditionality of production in Israel, the ...

Programme Aid and Development: Beyond Conditionality

Abstract: 1. Programme Aid and the International Financial Institutions 2 The Evaluation of Programme Aid: A Methodological Framework 3. Development by Default: Programme Aid to Bangladesh 4. Supporting Success: Economic Growth in Cape Verde in the Early Nineties 5. Politics and Partnership in Ghana in the 1980s, with Reference to Co-Financing as a Bilateral Aid Instrument 6. From Rehabilitation to Recovery: Mozambique in the 1990s 7. Aid, Debt and Dependence: Programme Aid in Nicaragua 8. Tanzania in the 1990s 9. Programme Aid in Uganda: What Does the 'Showcase' Show? 10. Aid in a Rapidly Growing 'Off-Track' Economy: Vietnam in the 1990s 11. A Black Sheep Amongst Reformers? Zambia in the 1990s 12. Modalities of Programme Aid 13. The Role of Donor Agencies in Policy Change 14. Have Reforms Worked? 15. The Impact of Programme Aid Funds 16. Conclusions on Programme Aid and Development: Beyond Conditionality

Vested Interests in a Positive Theory of IFI Conditionality

Abstract: Understanding of the domestic political environment is key to building broad country ownership and the successful implementation of reform programs supported by international financial institutions (IFIs). But recipient countries are not unitary actors: policymakers are influenced by special interest groups (SIGs) opposing reforms, leading to distorted policies. Using a new model of the financial relations between a benevolent IFI and a sovereign borrower subject to influence by SIGs, we analyze the determinants and welfare impacts of conditional and unconditional assistance. While conditionality may raise IFI welfare, economize on the amount of assistance, and lower domestic distortions, it may not always raise recipient country welfare. Recipient governments are always better off if assistance is provided unconditionally.

Ethnic Mobilisation and the Political Conditionality of European Union Accession: The Case of the Roma in Slovakia

Abstract: In recent years the European Union (EU) has applied its 'political' criteria for accession as an instrument to positively influence policies on minority issues in the candidate member states of central Europe. This essay explores the impact of the EU enlargement process on the political experiences of the Roma communities in Slovakia. Based on fieldwork observations, it is argued that although the EU's minority protection criterion has stimulated certain domestic legal and institutional changes in Slovakia, this external pressure has not been perceived by Roma activists as a clear point of support for their political mobilisation. This may relate to a number of circumstances. First, the EU minority criterion is perceived as limited because the EU has imposed requirements on candidate states which it does not demand from its current member states. Second, Roma activists suspect that Slovakia's concern for developing minority policies is related more to enhancing the country's standing in the international ...

Conditionality, coercion and other forms of 'power': international financial institutions in the Pacific

Abstract: Research on conditionality has cast doubt on its effectiveness. Nevertheless, international financial institutions have continued to apply policy conditions to loans to developing country governments. The article aims to contribute to the current debate about conditionality in two ways. Empirically, it introduces recent evidence from countries and institutions not included in earlier studies (the World Bank and the International Monetary Fund in Papua New Guinea, and the Asian Development Bank in the South Pacific). Conceptually, it introduces arguments from political science to extend our understanding of the power relationships involved. Some conditions have clearly been applied coercively, particularly on ‘Green’ issues. Donors have also controlled the agenda of negotiations. But more productive and disciplinary forms of power are shown to be at work in conditionality, as in other forms of aid. Copyright © 2002 John Wiley & Sons, Ltd.

The development and implementation of IMF and World Bank conditionality

Abstract: The paper presents a detailed description of IMF and World Bank conditionality and tries to explain changes in this conditionality over time as well as differences between the two institutions. Using panel data it is shown that the number of Fund conditions seem to be influenced by contemporaneous World Bank activity. Moreover, the paper tries to explain compliance with World Bank conditionality as well as interruptions of IMF programs in the recipient countries. Compliance with World Bank conditionality is lower in election years and pre-election years. Breakdowns of IMF programs are less likely in election years. However, no other political factors seem to influence interruptions and compliance systematically. The paper describes the institutions' reaction to recent criticism and concludes with implications for reform.

Inflation Targeting in the Context of IMF-Supported Adjustment Programs

Abstract: This paper argues that the IMF's traditional monetary conditionality – a ceiling on net domestic assets of the central bank and a floor on its net international reserves – should be adapted in IMF-supported adjustment programs with countries that have a framework of explicit inflation targets for the implementation of monetary policy. This adaptation should aim at enhancing correspondence and consistency between the monetary objectives of the central bank and the targets established under the IMF-supported adjustment program, as well as between the different instruments used to achieve the policy objectives and targets. The paper reviews various general options in this regard, and, using the case of Brazil as an example, demonstrates how these options may be implemented in practice.

Toward Creating a Regional Monetary Arrangement in East Asia

Abstract: IV