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The political economy of conditionality: An empirical analysis of World Bank loan disbursements

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  • Kilby, Christopher

Abstract

Traditional aid conditionality has been attacked as ineffective in part because aid agencies - notably the World Bank - often fail to enforce conditions. This pattern undermines the credibility of conditionality, weakening incentives to implement policy reforms. The standard critique attributes this time inconsistency to bureaucratic factors within the aid agency such as pressure to lend, defensive lending, or short-sighted altruism. Pressure from powerful donors provides another potential explanation for lax enforcement. This paper presents an empirical analysis of the political economy of conditionality in international organizations using the case of the World Bank and the United States. The analysis examines panel data on World Bank disbursements to 97 countries receiving structural adjustment loans between 1984 and 2005. Using UN voting as an indicator of alignment with the U.S., the paper presents evidence that World Bank structural adjustment loan disbursements are less dependent on macroeconomic performance in countries aligned with the United States.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 89 (2009)
Issue (Month): 1 (May)
Pages: 51-61

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Handle: RePEc:eee:deveco:v:89:y:2009:i:1:p:51-61

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Web page: http://www.elsevier.com/locate/devec

Related research

Keywords: World Bank Structural adjustment Conditionality United States;

References

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  1. Thomas Barnebeck Andersen & Thomas Harr & Finn Tarp, 2004. "On US politics and IMF Lending," Discussion Papers 04-11, University of Copenhagen. Department of Economics.
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  10. Axel Dreher & Nathan Jensen, 2005. "Independent Actor or Agent? An Empirical Analysis of the impact of US interests on IMF Conditions," KOF Working papers 05-118, KOF Swiss Economic Institute, ETH Zurich.
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  12. Martens,Bertin & Mummert,Uwe & Murrell,Peter & Seabright,Paul, 2008. "The Institutional Economics of Foreign Aid," Cambridge Books, Cambridge University Press, number 9780521055390, October.
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