What did structural adjustment adjust?: The association of policies and growth with repeated IMF and World Bank adjustment loans
AbstractOne feature of adjustment loans that has been often overlooked in their evaluation is their frequent repetition to the same country, with such extremes as the 30 IMF and World Bank adjustment loans to Argentina over 1980-99 or the 26 adjustment loans to Cote d'Ivoire and Ghana. The rate of repetition remains high and non-decreasing as cumulative adjustment loans increases. Repetition changes the nature of the selection problem, with the possible implication that new loans had to be given because earlier loans were not effective. Seventeen out of the eighteen countries that were IDA in 1980 and were in the top half of adjustment loans received became eligible for HIPC debt relief, compared to less than 50 percent of the IDA countries in the bottom half of adjustment lending -- again suggesting that previous loans were not effective at generating the growth necessary to service the debt. There were relative successes and failures, but none of the top 20 recipients of adjustment lending over 1980-99 were able to achieve reasonable growth and contain all policy distortions. Policies improved unevenly as adjustment loans accumulated, and even those policies that improved show a nonlinear satiation point after a certain number of adjustment loans is reached. An overall indicator of severe macroeconomic policy distortion does not improve as the number of adjustment loans increases in the overall sample, with about half the adjustment loan recipients showing severe distortions regardless of the number of cumulative adjustment loans. An instrumental variables regression for estimating the causal effect of repeated adjustment lending on policies shows a significant but small improvement for some macro policies, but none for others. None of the techniques in the paper is able to identify a growth effect, positive or negative, of repeated adjustment lending. The findings of this paper are in line with the foreign aid literature that shows that aid does not discriminate between
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Development Economics.
Volume (Year): 76 (2005)
Issue (Month): 1 (February)
Contact details of provider:
Web page: http://www.elsevier.com/locate/devec
Other versions of this item:
- William Easterly, 2002. "What did Structural Adjustment Adjust? The Association of Policies and Growth with Repeated IMF and World Bank Adjustment Loans," Working Papers 11, Center for Global Development.
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- F35 - International Economics - - International Finance - - - Foreign Aid
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mohsin S. Khan, 1990. "The Macroeconomic Effects of Fund-Supported Adjustment Programs," IMF Staff Papers, Palgrave Macmillan, vol. 37(2), pages 195-231, June.
- David Dollar & Craig Burnside, 2000.
"Aid, Policies, and Growth,"
American Economic Review,
American Economic Association, vol. 90(4), pages 847-868, September.
- International Monetary Fund, 1998. "Do IMF-Supported Programs Work? A Survey of the Cross-Country Empirical Evidence," IMF Working Papers 98/169, International Monetary Fund.
- Svensson, Jakob, 2003. "Why conditional aid does not work and what can be done about it?," Journal of Development Economics, Elsevier, vol. 70(2), pages 381-402, April.
- Summers, Lawrence H & Pritchett, Lant H, 1993. "The Structural-Adjustment Debate," American Economic Review, American Economic Association, vol. 83(2), pages 383-89, May.
- Alberto Alesina & David Dollar, 1998.
"Who Gives Foreign Aid to Whom and Why?,"
NBER Working Papers
6612, National Bureau of Economic Research, Inc.
- Knight, Malcolm & Santaella, Julio A., 1997. "Economic determinants of IMF financial arrangements," Journal of Development Economics, Elsevier, vol. 54(2), pages 405-436, December.
- Przeworski, Adam & Vreeland, James Raymond, 2000. "The effect of IMF programs on economic growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 385-421, August.
- Ratha, Dilip, 2005.
"Demand for World Bank lending,"
Elsevier, vol. 29(4), pages 408-421, December.
- Conway, Patrick, 1994. "IMF lending programs: Participation and impact," Journal of Development Economics, Elsevier, vol. 45(2), pages 365-391, December.
- Dicks-Mireaux, Louis & Mecagni, Mauro & Schadler, Susan, 2000. "Evaluating the effect of IMF lending to low-income countries," Journal of Development Economics, Elsevier, vol. 61(2), pages 495-526, April.
- Graham Bird & Dane Rowlands, 2002. "The Pattern of IMF Lending: An Analysis of Prediction Failures," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 5(3), pages 173-186.
- Corbo, Vittorio & Fischer, Stanley, 1995. "Structural adjustment, stabilization and policy reform: Domestic and international finance," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 44, pages 2845-2924 Elsevier.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.