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The Political Economy of Stabilization Programmes in Developing Countries

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  • Bruno S Frey
  • Reiner Eichenberger

Abstract

This report investigates the endogenous effects of the implementation of stabilization programmes (credits and different variants of conditionalities) in developing countries. A model is outlined, which at the same time builds on Modern Political Economy and New Institutional Economy and incorporates cognitive (psychological) aspects in decision making. Emphasizing the demand and supply of support for the government by the various interest groups and the population, this model helps to explain not only the programmes' effects on the standard of living, but also on the use of instruments by the groups involved. Especially, effects on the politicians' own consumption, the extent of corruption by bribery and the suppression of the population and particular groups are analysed. Conditions under which the economic and/or the political situations improve for the population are identified and corresponding testable propositions are formulated ... Ce rapport examine les effets endogènes de la mise en œuvre dans les pays en développement de programmes de stabilisation (crédits et différentes formes de conditionalité). Un modèle est ébauché à partir de l'Économie politique moderne et de la Nouvelle économie des institutions, tout en tenant compte des aspects cognitifs (psychologiques) du processus de prise de décision. Mettant l'accent sur la demande et l'offre de soutien de la population et des divers groupes d'intérêt au gouvernement, ce modèle aide à expliquer non seulement les effets de tels programmes sur le niveau de vie, mais également sur l'utilisation d'instruments par les groupes concernés. En particulier, sont analysés les effets sur la consommation des élites politiques, sur l'importance de la corruption, et sur les politiques répressives à l'égard de la population et de certains groupes. Les conditions qui tendent à permettre une meilleure situation économique et/ou politique pour la population sont identifiées ...

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Development Centre Working Papers with number 59.

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Date of creation: Apr 1992
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Handle: RePEc:oec:devaaa:59-en

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Cited by:
  1. Ralph Rotte & Klaus Zimmermann, 1998. "Fiscal restraint and the political economy of EMU," Public Choice, Springer, vol. 94(3), pages 385-406, March.
  2. Adi Schnytzer & Janez Šušteršič, 1998. "Why join the party in a one-party system?: Popularity versus political exchange," Public Choice, Springer, vol. 94(1), pages 117-134, January.
  3. Funk, Matt, 2008. "On the Problem of Sustainable Economic Development: A Theoretical Solution to this Prisoner's Dilemma," MPRA Paper 19025, University Library of Munich, Germany, revised 08 Jun 2008.
  4. Morrissey, Oliver, 2002. "Making Debt Relief Conditionality Pro-Poor," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  5. McBride, Michael, 2005. "Crises, reforms, and regime persistence in sub-Saharan Africa," European Journal of Political Economy, Elsevier, vol. 21(3), pages 688-707, September.

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