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Governance-Related Conditionalities Of The International Financial Institutions

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  • Devesh KAPUR
  • Richard WEBB

Abstract

This paper examines the new found enthusiasm for governance-related conditionalities in the International Monetary Fund (IMF) and World Bank lending. This new agenda has focussed in particular on legislative and institution-building efforts by borrowers to increase accountability, transparency, the rule of law, and participation. The paper attempts to document this trend by analyzing a sample of 25 upper-tranche arrangements in 1999. A review of past efforts to impose conditionality in related areas provides a discouraging background to this even more ambitious attempt by the international financial institutions (IFIs) at governmental and social re-engineering. Critical weaknesses in the new agenda are highlighted, particularly the complexity and potential conflicts that follow from a multiplication of goals, and also the distortions and ineffectiveness that result from a narrow focus on borrower governments, to the exclusion of private actors and civil society, who are also part of the problem. A brief account of some alternatives to conditionality, as currently practised, are also examined. Finally, the paper raises some troubling implications of this new agenda for the IFIs themselves, especially with regard to their operational effectiveness, their legitimacy and their fairness.

Suggested Citation

  • Devesh KAPUR & Richard WEBB, 2000. "Governance-Related Conditionalities Of The International Financial Institutions," G-24 Discussion Papers 6, United Nations Conference on Trade and Development.
  • Handle: RePEc:unc:g24pap:6
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    File URL: http://www.unctad.org/en/Docs/pogdsmdpbg24d6.en.pdf
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    References listed on IDEAS

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    1. Fafchamps, Marcel, 1996. "Sovereign debt, structural adjustment, and conditionality," Journal of Development Economics, Elsevier, vol. 50(2), pages 313-335, August.
    2. Mathias Dewatripont & Ian Jewitt & Jean Tirole, 1999. "The Economics of Career Concerns, Part II: Application to Missions and Accountability of Government Agencies," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 199-217.
    3. Stiglitz, Joseph E, 1999. "The World Bank at the Millennium," Economic Journal, Royal Economic Society, vol. 109(459), pages 577-597, November.
    4. Barbone, Luca & Das-Gupta, Arindam & De Wulf, Luc & Hansson, Anna, 1999. "Reforming tax systems - the World Bank record in the 1990s," Policy Research Working Paper Series 2237, The World Bank.
    5. Messick, Richard E, 1999. "Judicial Reform and Economic Development: A Survey of the Issues," World Bank Research Observer, World Bank Group, vol. 14(1), pages 117-136, February.
    6. Marchesi, Silvia & Thomas, Jonathan P, 1999. "IMF Conditionality as a Screening Device," Economic Journal, Royal Economic Society, vol. 109(454), pages 111-125, March.
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    Cited by:

    1. Paul LÖWENTHAL, 2005. "Société civile et participation politique.. Le cas de la coopération au développement," Mondes en développement, De Boeck Université, vol. 129(1), pages 59-73.
    2. Deepa Narayan, 2005. "Measuring Empowerment : Cross Disciplinary Perspectives," World Bank Publications, The World Bank, number 7441.
    3. Yýlmaz Akyüz, "undated". "Global Rules and Markets: Constraints over Policy Autonomy in Developing Countries," Working Papers 2007/5, Turkish Economic Association.
    4. World Development Movement, 2001. "Policies to Roll-back the State and Privatize? Poverty Reduction Strategy Papers Investigated," WIDER Working Paper Series 120, World Institute for Development Economic Research (UNU-WIDER).
    5. Geoffrey R D Underhill & Xiaoke Zhang, 2006. "Norms, Legitimacy, and Global Financial Governance," WEF Working Papers 0013, ESRC World Economy and Finance Research Programme, Birkbeck, University of London.
    6. Richard Kozul-Wright & Paul Rayment, 2004. "Globalization Reloaded: An Unctad Perspective," UNCTAD Discussion Papers 167, United Nations Conference on Trade and Development.
    7. Usman Khalid, 2016. "Catch-up in Institutional Quality: An Empirical Assessment," Discussion Papers 2016-04, University of Nottingham, CREDIT.
    8. Ariel Buira, 2002. "An Analysis of IMF Conditionality," Economics Series Working Papers 104, University of Oxford, Department of Economics.
    9. Jiro Honda, 2008. "Do IMF Programs Improve Economic Governance?," IMF Working Papers 08/114, International Monetary Fund.
    10. Bag, Parimal Kanti & Roy Chowdhury, Prabal, 2016. "Gradualism in aid and reforms," Journal of International Economics, Elsevier, vol. 103(C), pages 108-123.
    11. Benu Schneider, 2005. "Do Global Standards And Codes Prevent Financial Crises? Some Proposals On Modifying The Standards-Based Approach," UNCTAD Discussion Papers 177, United Nations Conference on Trade and Development.
    12. Jean-Pierre Allegret & Philippe Dulbecco, 2007. "The institutional failures of International Monetary Fund conditionality," The Review of International Organizations, Springer, vol. 2(4), pages 309-327, December.

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