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Growth-oriented adjustment programs: A statistical analysis

  • Faini, Riccardo
  • De Melo, Jaime
  • Senhadji, Abdelhak
  • Stanton, Julie

After the fall in average per capita GDP growth that took place in the 1980s, adjustment lending programs supported by the International Monetary Fund (IMF) and the World Bank (WB) were launched in response to the deteriorating external environment. The purpose of this paper is to evaluate and to assess statistically the extent to which adjustment programs supported by the IMF and the WB have restored growth. The evaluation relied on a large sample of countries (93) and controls for some of the statistical difficulties associated with measuring the effectiveness of adjustment programs. The paper reviews the environment under which IMF-WB lending took place, the rationale for adjustment lending, and the distribution of adjustment loans through time. The results of the statistical evaluation suggest that, after controlling for external factors and for initial conditions, growth is not higher in countries that receive IMF-WB funds, but that investment was significantly lower than for non-recipient countries. The paper also examines further long-term growth prospects.

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Article provided by Elsevier in its journal World Development.

Volume (Year): 19 (1991)
Issue (Month): 8 (August)
Pages: 957-967

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Handle: RePEc:eee:wdevel:v:19:y:1991:i:8:p:957-967
Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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  1. Jeffrey Sachs & Harry Huizinga, 1987. "U.S. Commercial Banks and the Developing Country Debt Crisis," NBER Working Papers 2455, National Bureau of Economic Research, Inc.
  2. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November.
  3. Kiviet, Jan F, 1986. "On the Rigour of Some Misspecification Tests for Modelling Dynamic Relationships," Review of Economic Studies, Wiley Blackwell, vol. 53(2), pages 241-61, April.
  4. Mario I. Blejer & Mohsin S. Khan, 1984. "Government Policy and Private Investment in Developing Countries (Politique des pouvoirs publics et investissement privé dans les pays en développement) (Política estatal e inversión privada en lo," IMF Staff Papers, Palgrave Macmillan, vol. 31(2), pages 379-403, June.
  5. Balassa, Bela, 1988. "Quantitative appraisal of adjustment lending," Policy Research Working Paper Series 79, The World Bank.
  6. Dornbusch, Rudiger, 1991. "Credibility and Stabilization," The Quarterly Journal of Economics, MIT Press, vol. 106(3), pages 837-50, August.
  7. Cornia, Giovanni Andrea & Jolly, Richard & Stewart, Frances (ed.), 1987. "Adjustment with a Human Face: Volume 1, Protecting the Vulnerable and Promoting Growth," OUP Catalogue, Oxford University Press, number 9780198286097, March.
  8. Rudiger Dornbusch, 1985. "Policy and Performance Links between LDC Debtors and Industrial Nations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 16(2), pages 303-368.
  9. Buffie, Edward F., 1986. "Devaluation, investment and growth in LDCs," Journal of Development Economics, Elsevier, vol. 20(2), pages 361-379, March.
  10. Buffie, Edward F., 1984. "The macroeconomics of trade liberalization," Journal of International Economics, Elsevier, vol. 17(1-2), pages 121-137, August.
  11. Dadkhah, Kamran M & Zahedi, Fatemeh, 1986. "Simultaneous Estimation of Production Functions and Capital Stocks for Developing Countries," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 443-51, August.
  12. Kiviet, Jan F., 1985. "Model selection test procedures in a single linear equation of a dynamic simultaneous system and their defects in small samples," Journal of Econometrics, Elsevier, vol. 28(3), pages 327-362, June.
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