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The IMF and the Mobilization of Foreign Aid

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  • Graham Bird

    (University of Surrey)

  • Dane Rowlands

    (Carleton University)

Abstract

Particularly in the context of the Millennium Development Goals, there has been much discussion of the association between the International Monetary Fund and bilateral aid flows. What role should the Fund be playing in helping to achieve the MDGs? Some observers have suggested that the Fund should seek to reduce its role in poor countries and should be minimising its own lending. They see aid donors taking on a larger role and present the IMF and aid donors as substitutes. Others envisage a much bigger lending role for the Fund. This may hint at complementarities. Although this discussion raises important policy issues there are very few studies that examine the relationship empirically. This paper attempts to help fill this gap. It explores the extent to which the IMF has had a catalytic effect on Official Development Assistance and the potential channels through which catalysis might work. It finds strong evidence of a positive association and suggests that this may have more to do with conditionality than with the provision of IMF resources. But it may not represent catalysis in the conventional sense. There is a synergy between the IMF and bilateral aid that may yet be more fully developed and exploited.
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Suggested Citation

  • Graham Bird & Dane Rowlands, 2005. "The IMF and the Mobilization of Foreign Aid," School of Economics Discussion Papers 1105, School of Economics, University of Surrey.
  • Handle: RePEc:sur:surrec:1105
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    References listed on IDEAS

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    1. Vreeland,James Raymond, 2003. "The IMF and Economic Development," Cambridge Books, Cambridge University Press, number 9780521016957.
    2. Graham Bird & Dane Rowlands, 2004. "The Catalytic Effect of Lending by the International Financial Institutions," Palgrave Macmillan Books, in: International Finance and the Developing Economies, chapter 12, pages 204-226, Palgrave Macmillan.
    3. Mr. Ashoka Mody & Mr. Diego Saravia, 2003. "Catalyzing Capital Flows: Do IMF-Supported Programs Work As Commitment Devices?," IMF Working Papers 2003/100, International Monetary Fund.
    4. Mr. Robert Powell, 2003. "Debt Relief, Additionality, and Aid Allocation in Low Income Countries," IMF Working Papers 2003/175, International Monetary Fund.
    5. Collier, Paul & Gunning, Jan Willem, 1999. "The IMF's Role in Structural Adjustment," Economic Journal, Royal Economic Society, vol. 109(459), pages 634-651, November.
    6. Morris, Stephen & Shin, Hyun Song, 2006. "Catalytic finance: When does it work?," Journal of International Economics, Elsevier, vol. 70(1), pages 161-177, September.
    7. G. Bird & D. Rowlands, 2001. "World Bank Lending And Other Financial Flows: Is There a Connection?," Journal of Development Studies, Taylor & Francis Journals, vol. 37(5), pages 83-103.
    8. Graham Bird & Dane Rowlands, 2000. "The catalyzing role of policy-based lending by the IMF and the World Bank: fact or fiction?," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(7), pages 951-973.
    9. Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
    10. Mr. Ales Bulir & Mr. Timothy D. Lane, 2002. "Aid and Fiscal Management," IMF Working Papers 2002/112, International Monetary Fund.
    11. William Easterly & Ross Levine & David Roodman, 2004. "Aid, Policies, and Growth: Comment," American Economic Review, American Economic Association, vol. 94(3), pages 774-780, June.
    12. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
    13. Graham Bird, 2004. "The IMF Forever: An Analysis of the Prolonged Use of Fund Resources," Journal of Development Studies, Taylor & Francis Journals, vol. 40(6), pages 30-58.
    14. Graham Bird & Thomas D Willett, 2004. "IMF Conditionality, Implementation and the New Political Economy of Ownership," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 46(3), pages 423-450, September.
    15. Mr. Ales Bulir & Mr. A. J Hamann, 2001. "How Volatile and Unpredictable Are Aid Flows, and What Are the Policy Implications?," IMF Working Papers 2001/167, International Monetary Fund.
    16. John Hudson, 2004. "Introduction: Aid and Development," Economic Journal, Royal Economic Society, vol. 114(496), pages 185-190, June.
    17. Bird, Graham, 2002. "The credibility and signalling effect of IMF programmes," Journal of Policy Modeling, Elsevier, vol. 24(9), pages 799-811, December.
    18. Axel Dreher, 2003. "The influence of elections on IMF programme interruptions," Journal of Development Studies, Taylor & Francis Journals, vol. 39(6), pages 101-120.
    19. Graham Bird & Dane Rowlands, 2002. "Do IMF Programmes Have a Catalytic Effect on Other International Capital Flows?," Oxford Development Studies, Taylor & Francis Journals, vol. 30(3), pages 229-249.
    20. repec:fth:oxesaf:99-18 is not listed on IDEAS
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    Cited by:

    1. Laurence Allain & Mr. Calixte Ahokpossi & Giovanna Bua, 2014. "A Constrained Choice? Impact of Concessionality Requirements on Borrowing Behavior," IMF Working Papers 2014/176, International Monetary Fund.
    2. Ms. Era Dabla-Norris & Ms. Camelia Minoiu & Luis-Felipe Zanna, 2010. "Business Cycle Fluctuations, Large Shocks, and Development Aid: New Evidence," IMF Working Papers 2010/240, International Monetary Fund.
    3. Yasemin Bal Gündüz & Masyita Crystallin, 2018. "Do IMF programs catalyze donor assistance to low-income countries?," The Review of International Organizations, Springer, vol. 13(3), pages 359-393, September.
    4. A. C. Onuorah & Ozurumba Benedict Anayachukwu, 2016. "International Monetary Fund Economic Indicators and Economic Growth in Nigeria," International Journal of Management Sciences, Research Academy of Social Sciences, vol. 7(1), pages 30-37.
    5. Presbitero, Andrea F. & Zazzaro, Alberto, 2012. "IMF Lending in Times of Crisis: Political Influences and Crisis Prevention," World Development, Elsevier, vol. 40(10), pages 1944-1969.
    6. Songying Fang & Erica Owen, 2011. "International institutions and credible commitment of non-democracies," The Review of International Organizations, Springer, vol. 6(2), pages 141-162, July.
    7. ., 2016. "Introduction and overview: the purposes and operations of the IMF," Chapters, in: The International Monetary Fund, chapter 1, pages 1-18, Edward Elgar Publishing.
    8. Atangana Ondoa Henri, 2019. "Heavily indebted poor countries initiative (HIPC), debt relief, economic stability and economic growth in Africa," Economic Change and Restructuring, Springer, vol. 52(2), pages 89-121, May.
    9. Stubbs, Thomas H. & Kentikelenis, Alexander E. & King, Lawrence P., 2016. "Catalyzing Aid? The IMF and Donor Behavior in Aid Allocation," World Development, Elsevier, vol. 78(C), pages 511-528.
    10. Mr. Andrea F Presbitero & Chiara Broccolini & Alessandro Maffioli & Rodolfo Stucchi & Giulia Lotti, 2019. "Mobilization Effects of Multilateral Development Banks," IMF Working Papers 2019/028, International Monetary Fund.
    11. Rune Hagen, 2012. "Certified or branded?," The Review of International Organizations, Springer, vol. 7(2), pages 203-230, June.
    12. Kentikelenis, Alexander E. & Stubbs, Thomas H. & King, Lawrence P., 2015. "Structural adjustment and public spending on health: Evidence from IMF programs in low-income countries," Social Science & Medicine, Elsevier, vol. 126(C), pages 169-176.

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    More about this item

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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