Aid and the Political Economy of Policy Change: 'ownership' problem

This volume looks at the effectiveness of conditionality in structural adjustment programmes. Tony Killick charts the emergence of conditionality, and challenges the widely held assumption that it is a co-operative process, arguing that in fact it tends to be coercive and detrimental to development objectives. Through detailed case studies of twenty one recipient countries, he explores the key issues of: * ownership * role of agencies * government objectives and the effects of policy. The conclusion is that conditionality has been counterproductive to price stability, economic growth and investment. BOOK COVER......Page 1 HALF-TITLE......Page 2 TITLE......Page 3 COPYRIGHT......Page 4 DEDICATION......Page 5 CONTENTS......Page 6 TABLES......Page 8 PREFACE......Page 9 LIST OF ABBREVIATIONS......Page 11 I The spread of conditionality......Page 13 II The modalities of conditionality......Page 17 A consensual view......Page 21 The involuntary nature of stipulated policies......Page 22 IV The legitimation of conditionality......Page 23 Notes......Page 29 I Introduction and caution......Page 31 The literature......Page 33 World Bank programmes......Page 35 IMF programmes......Page 37 Overview......Page 38 Evidence on implementation......Page 39 Two misleading reports......Page 43 Direct evidence on policy leverage......Page 50 IV Implementation and results......Page 52 V Social effects and the management of change......Page 55 VI Conclusions......Page 60 Notes......Page 62 3 CONDITIONALITY AND ADJUSTMENT IN SOUTH EAST ASIA AND LATIN AMERICA......Page 64 Criteria of adjustment......Page 65 The initial situation......Page 66 Macroeconomic management......Page 68 Market friendliness and openness......Page 70 Voluntary adjustment......Page 72 I–4 The special case of the Philippines......Page 73 The influence of the IFIs’ financial support......Page 76 Policy dialogue and the role of technocrats......Page 77 I–6 Conclusions on South-east Asia......Page 79 II Latin America......Page 80 II–1 Policies before the turnaround......Page 81 II–2 The turning points......Page 85 Conditionality......Page 88 Policy dialogue......Page 90 II–4 Other external influences......Page 91 II–5 Internal factors influencing policy change......Page 92 II–6 Conclusions on Latin America......Page 94 Notes......Page 95 I Introduction......Page 96 II Meaning and measurement of ownership......Page 97 III The effects of ownership......Page 99 IV Ownership matters because interests conflict......Page 102 V National resentment and the erosion of sovereignty......Page 104 VI The extent of interest conflicts......Page 108 VII Conclusion......Page 109 Notes......Page 110 An informal statement of the principal—agent problem......Page 111 Some qualifications......Page 113 The methods employed and the limitations of the study......Page 115 The appropriateness of an agency approach......Page 119 Conflicting objectives......Page 121 Distributional costs......Page 123 Transactions costs......Page 125 The influence of long-term relationships......Page 126 Does conditionality raise policy credibility?......Page 129 The influence of shocks......Page 131 APPENDIX: THE SELECTION PROCEDURES FOR THE COUNTRY SAMPLE......Page 134 a Relating to participation constraints......Page 135 c Other influences on implementation......Page 136 Notes......Page 137 The adequacy of the reward system......Page 139 Is non-implementation penalized?......Page 143 Kenya......Page 144 Turkey......Page 145 Zambia......Page 146 Conditionality and moral hazard......Page 148 External factors......Page 149 Internal pressures......Page 153 Adverse selection and the debt problem......Page 154 Hurry-up lending......Page 156 Institutional factors......Page 157 Asymmetrical information and enforcement costs......Page 159 A recapitulation......Page 161 Other evidence on the influence of national politics......Page 163 Does conditionality tip the balance?......Page 165 Notes......Page 168 I A paradox revisited......Page 170 Criteria and assessment......Page 172 The sanctions analogy......Page 177 The costs of failure......Page 178 The possibilities of doing better......Page 181 Conclusion on conditionality......Page 185 The search for an alternative......Page 186 The principles of an alternative model......Page 187 Selectivity......Page 188 Support......Page 190 Dialogue......Page 192 Identifying ownership......Page 193 Maximizing influence......Page 196 A residual role for conditionality?......Page 197 Changing donor practices......Page 200 Some difficulties......Page 201 A postscript on political conditionality......Page 204 Notes......Page 206 MASTER TABLE......Page 208 Works cited in the main text......Page 215 General......Page 223 Colombia......Page 224 South Korea......Page 225 Thailand......Page 226 The Philippines......Page 227 INDEX......Page 228