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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 ...

Suggested Citation

  • Bruno S Frey & Reiner Eichenberger, 1992. "The Political Economy of Stabilization Programmes in Developing Countries," OECD Development Centre Working Papers 59, OECD Publishing.
    • Handle: RePEc:oec:devaaa:59-en
    DOI: 10.1787/802526617102
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    Cited by:

    1. Thierry Mayer, 2006. "Policy Coherence for Development : A Background paper on Foreign Direct Investment," SciencePo Working papers Main hal-01065640, HAL.
    2. Schuknecht, Ludger, 2000. "Fiscal Policy Cycles and Public Expenditure in Developing Countries," Public Choice, Springer, vol. 102(1-2), pages 115-130, January.
    3. repec:hal:wpspec:info:hdl:2441/10184 is not listed on IDEAS
    4. Daniel G. Arce M., 1996. "Social Norms, Inflation And Stabilization," Rationality and Society, , vol. 8(3), pages 277-294, August.
    5. Luis Fernando Ramírez Hernández & Manuel Beltrán Garzón, 2009. "Justificación económica de la descentralización: un análisis desde las finanzas regionales," Revista Equidad y Desarrollo, Universidad de la Salle, August.
    6. 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.
    7. Rotte, Ralph & Zimmermann, Klaus F, 1998. "Fiscal Restraint and the Political Economy of EMU," Public Choice, Springer, vol. 94(3-4), pages 385-406, March.
    8. Schnytzer, Adi & Sustersic, Janez, 1998. "Why Join the Party in a One-Party System?: Popularity versus Political Exchange," Public Choice, Springer, vol. 94(1-2), pages 117-134, January.
    9. Schuknecht, Ludger, 1998. "Fiscal policy cycles and the exchange regime in developing countries," WTO Staff Working Papers ERAD-97-04, World Trade Organization (WTO), Economic Research and Statistics Division.
    10. 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.
    11. Dutta, Nabamita & Williamson, Claudia R., 2016. "Can foreign aid free the press?," Journal of Institutional Economics, Cambridge University Press, vol. 12(3), pages 603-621, September.
    12. repec:spo:wpecon:info:hdl:2441/10184 is not listed on IDEAS
    13. Oliver Morrissey, 2002. "Making Debt Relief Conditionality Pro-Poor," WIDER Working Paper Series DP2002-04, World Institute for Development Economic Research (UNU-WIDER).
    14. Carbonnier, Gilles, 2002. "The Competing Agendas of Economic Reform and Peace Process: A Politico-Economic Model Applied to Guatemala," World Development, Elsevier, vol. 30(8), pages 1323-1339, August.
    15. repec:hal:spmain:info:hdl:2441/10184 is not listed on IDEAS
    16. Nabamita Dutta & Peter T. Leeson & Claudia R. Williamson, 2013. "The Amplification Effect: Foreign Aid's Impact on Political Institutions," Kyklos, Wiley Blackwell, vol. 66(2), pages 208-228, May.
    17. Funk, Matt, 2008. "On the Problem of the Island of Earth: Introducing a Universal Theory of Value in an Open Letter to The President of the United States," MPRA Paper 14489, University Library of Munich, Germany.

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