The IMF Forever: An Analysis of the Prolonged Use of Fund Resources

Considerable concern has been expressed about the prolonged use made of International Monetary Fund (IMF) resources by a number of member countries. Some commentators have seen this as being fundamentally at odds with the role of the IMF as a source of temporary balance of payments support and as one aspect of mission creep by the Fund. The perceived importance of the issue is reflected by the fact that the first report of the Fund's Independent Evaluation Office focused on it. This article provides a detailed analysis of the prolonged use of Fund resources. It assesses the extent to which it is a problem and draws on available empirical evidence (both qualitative and quantitative) to isolate the causes of prolonged use. It concludes by examining the policy questions to which prolonged use gives rise.     

法国对外援助管理体系及对中国的启示

对外援助是法国对外关系的重要组成部分,推广法国文化是法国对外援助的核心目标,但不重视对外援助的经济利益。法国重视对特定地区的援助,并制定了"优先团结地区"政策。法国对外援助属于中央集权式管理,外交部、财政部和移民部是法国对外援助管理体系的主要构成部分,法国开发署负责执行双边援助。对中国对外援助管理体系改革的启示在于设立独立的对外援助管理机构,并完善对外援助协调机制。     

Development assistance on the brink

The international aid regime is currently faced with a major paradox. On the one hand, officials in bilateral and multlateral agencies increasingly agree that 'aid matters' and can contribute significantly to development. This confidence has been reinforced by the fact that, after a decade dominated by the objective of structural adjustment, the much less controversial one of sustainable development has taken over as the new mantra of aid policies. On the other hand, development assistance appears to be a declining priority for foreign policy-makers in the developed countries. The generosity of donors has diminished to the point that aid reached an all-time low in 1997. The aim of this article is to make sense of this paradox. After examining the grounds for optimism within the aid community, the article then explains why there is reason to doubt that foreign assistance can effectively foster sustainable development over the course of the next generation.     

The Obstacles to Foreign Aid Harmonization: Lessons from Decentralization Support in Indonesia

Relying on a new institutional economics analysis of transaction costs, the 2005 Paris Declaration on Aid Effectiveness emphasizes donor harmonization as an intermediate objective for increasing the effectiveness of foreign assistance in bringing about development outcomes. Surveys on adherence to the Paris Declaration commitments so far suggest that foreign aid donors are lagging behind targets. This paper explores the political and bureaucratic obstacles faced by bilateral and multilateral aid organizations trying to harmonize aid at the country level. Looking at foreign support for the decentralization and local governance sector in Indonesia??where a ??bold experiment?? in harmonization failed to bring about improved donor coordination??I find evidence that the lack of harmonization can be linked to some of the characteristic pathologies of foreign aid: the dominance of the strategic interests of some donors and the structure of bureaucratic incentives within aid agencies. These traditional problems work through a pathway that is underexplored in the literature: by enabling a lack of coordination among agencies within the recipient government, donors create barriers to harmonization of their own programming. However, I conclude by noting that government coordination failure may not be as much of a problem as donors make it out to be. Decisions about governance and decentralization are necessarily contentious and political. In the case where donors succeed in bringing about government coordination in the interest of their own harmonization, they risk exercising harmful leverage that leads to premature resolution of domestic policy disputes, thereby undermining the Paris Declaration principle of country ownership.     

Industrialisation as a structural determinant of inflation performance in IMF stabilisation programmes in less developed countries

This article considers the impact of IMF stabilisation programmes on inflation performance in LDCs. It is argued that the success of a programme in effecting a change in the inflationary process will be influenced by the structural characteristics of the economy and in particular by the stage of industrialisation reached. The empirical analysis is based on a sample of LDCs which undertook adjustment programmes supported by Fund resources during the 1970s, and the results obtained are consistent with the hypothesis of an association between economic structure and inflation performance.     

Educational Attainment and Attitudes Towards War in Muslim Countries Contemplating War: The Cases of Jordan,Lebanon, Pakistan,and Turkey

This study addresses the little understood relationship between educational attainment and public attitudes towards war in four predominantly Muslim countries contemplating war: Jordan, Lebanon, Pakistan, and Turkey. The multivariate analysis using public opinion data suggests that the educational attainment of respondents has no statistically significant association with believing that war is necessary for obtaining justice. In a separate analysis, there is no statistically significant association between educational attainment and believing that UN approval is necessary before using military force to deal with an international threat. This study suggests that there is some validity to concerns raised by the UK's Department for International Development and the United Nations Children's Fund (UNICEF) that education may not be contributing to peaceful conflict resolution.     

The Effect of IMF Programmes on Economic Growth in Low Income Countries: An Empirical Analysis

Using an LIC-specific participation model, we adopt a propensity score matching (PSM) methodology to compare economic growth performance in countries with and without IMF programmes over the period 1989–2008. Concessional programmes are found to have had a generally positive effect on economic growth for up to two years after agreements were signed. The effects are contingent on other factors including overall initial economic conditions, recent prior growth performance, aid dependency, debt, IMF resources, recent history of IMF engagement and time period. We examine the implications of the results as the IMF considers how best to support the Sustainable Development Goals.     

Aid and Trade – A Donor's Perspective

One reason donors provide foreign aid is to support their exports to aid-recipient countries. Time series data for Germany suggests an average return of between US$1.04–$1.50 for each US dollar of aid spent by Germany. Although this is well below previous estimates, the value is robust to different specifications and econometric approaches. Interestingly, we find strong evidence of crowding out between bilateral donors in the sense that bilateral aid from other EU members significantly reduces exports from Germany to the recipients. The evidence suggests that, in the long run, aid causes exports and not vice versa. We discuss the implications these findings might have for aid volumes and allocation.     

How Concessional is Aid Lending?

The method used by Development Assistance Committee countries for measuring the concessionality of aid loans has remained unchanged for nearly 20 years. It was designed to measure the net cost of aid to donors not the net benefit to recipients. The discount rate used takes no account of changes in the value of the currency of the loan or of changes in prices for goods traded by recipient countries. Furthermore, it does not consider the implications of tying of aid or of policy conditionality. This paper suggests an alternative measure that shows the real net benefit of aid finance to recipients. It argues that the discount rate used by the Development Assistance Committee is too high and that changes in the value of the currency in which a loan is taken out can be important. Nevertheless, real rates of interest for developing countries remain surprisingly high despite low nominal rates due to falling prices of traded goods. This finding has implications for the future real cost of debt service to recipients.     

East Asian financial regionalism: why economic enhancements undermine political sustainability

East Asian financial regionalism was born in response to the Asian Financial Crisis of 1997–1998. The centrepiece of financial regionalism was the Chiang Mai Initiative (CMI), an emergency liquidity mechanism created by the ASEAN+3. It embodied both a clear interpretation of what had gone wrong in 1997–1998 and an understanding of the need for institutions that would be politically viable despite Sino-Japanese rivalry. Enforcement under CMI relied on the ‘IMF link’ – release of funds would be predicated on crisis countries' initiating negotiations with the International Monetary Fund (IMF), as a means of reducing moral hazard, enforcing conditionality and diverting blame from the leading creditors, Japan and China. The global financial crisis of 2008–2010 and the eurozone crisis that followed have inspired important changes meant to address CMI's economic gaps, including accelerated adoption of ‘CMI Multilateralization’ (CMIM), the creation of a new surveillance unit (ASEAN+3 Macroeconomic Research Organization, or AMRO), and the establishment of a new precautionary line. Many observers have remarked that these developments weaken the IMF link, which had effectively subordinated CMI to the IMF. While the moves appear to demonstrate a more confident, autonomous regionalism and a relative devaluation of the US-dominated global financial institutions, this paper argues that in fact, the ASEAN+3 states have again unearthed the underlying politics of divided leadership and mutual suspicion. CMIM is now threatened by the renewed potential for internal divisions. Further complicating the picture, both China and Japan have recently established large bilateral swap lines outside of the CMIM framework with several of their ASEAN+3 partners, raising the question of whether CMIM is moving towards political irrelevance even as it has arrived at a high water mark in its institutional development.     

The Changing Development Landscape in the First Decade of the 21st Century and its Implications for Development Studies

Abstract

The first decade of the 21st century has been characterised by complex and interrelated changes that have affected development. Development studies as a discipline has traditionally been concerned with the impact of colonisation and neocolonialism, and with neoliberal-related growth models. This paper argues that, since around the turn of the century, there has been a major shift in development, driven by a series of fundamental changes, including the relative failure of the neoliberal project in the 1980s and 1990s, which by the 2000s was partly replaced by a greater concern with addressing security issues with aid; the rise of China and other middle-income countries as large resource providers for development; and the rapid increase of remittance flows to lower and middle income countries. The paper looks at how both development studies and aid policy in Australia and elsewhere have been relatively slow to engage with this rapidly changing context. The big challenges for development studies will be: engaging with developing countries as development donors with different agendas for development; the decline of much of the current neoliberal paradigm; alternative sources of development finance; and the securitisation of Western aid.     

National Subversion of Supranational Goals: ‘Pork-Barrel’ Politics and EU Regional Aid

The structural funds were designed to give the European Commission supranational control over where regional aid was spent. In this article, we argue that domestic ‘pork-barrel’ politics determine which regions are awarded regional aid in the new member states of Eastern Europe. Support for our argument comes from a dataset that includes 1,688 European Regional Development Fund grants to Latvia's 118 regions and 1,533 pre-accession Phare awards to Bulgaria's 264 municipalities. In both Bulgaria and Latvia, we find that regional aid projects went to wealthier not poorer localities, and to those that supported coalition parties in the previous election.     

The folly of “aid for stabilisation”

Over the last two decades, billions in aid money has been spent in highly insecure regions of conflict affected states in the hope that aid would lead to less violence and more stability. A recent wave of academic work on the impact of aid on violence has now amassed convincing empirical evidence that this hope is futile. Aid injected in highly insecure regions, where violence is a reality and insurgents retain some capacities, will increase, not dampen violence. This essay first provides a summary of the findings of the recent empirical literature. It then demonstrates that two causal mechanisms – predation and sabotage – explain why aid in highly insecure settings will likely lead to less, not more, stability. The essay then exemplifies these two causal mechanisms, using original qualitative and quantitative data from Afghanistan. It ends with a discussion of the implications for donors engaged in countries affected by conflict.     

Chinese views of global economic governance

China’s rise and America’s global retreat have made China’s role in global governance more important than ever before. By analysing Chinese (mainly academic) literature, this article studies contemporary Chinese views of global economic governance. It finds that the 2008 financial crisis is a notable point of the Chinese discourse. In addition, dialogue platforms – the G20 in particular – rather than key institutions of global economic governance such as International Monetary Fund (IMF), World Bank and Word Trade Organization (WTO) win overwhelming attention in the Chinese discourse. Chinese views of global economic governance also highly value the role of the state, while paying less attention to Non Governmental Organisations (NGO) and civil society. Overall, this article highlights a diverse, shifting and sometimes contradictory Chinese discourse on global economic governance, which helps to develop a more accurate understanding of China’s ambition in global economic governance.     

Watching from the sidelines? The decline of the IMF's crisis management role

This article compares the International Monetary Fund (IMF)'s crisis management role during the Asian financial crisis in 1997–98 with the role it has played during the ‘credit crunch’ which emerged in the wake of the subprime crisis in the United States. With prominent calls for the construction of new forms of global financial governance to prevent a recurrence of the subprime crisis in the future, we explore how the designated guardian of the international financial system has responded to the credit crunch in order to evaluate the strengths and weaknesses of the existing system. Our comparison of the US subprime crisis and the Asian financial crisis of the late 1990s indicates that the IMF has lost credibility with its members, and particularly with its principal sponsor, the United States, which has curbed its capacity to develop multilateral solutions to major financial crises.     

Governance,Representation and International Aid

The growth of the postwar 20th century international aid architecture has generated much debate over the successes and failures of aid, its changing forms and its challenges. This article uses this aid landscape to explore the representational or discursive power and authority of the aid donor over the aid recipient. It suggests that representations about what aid does, its modalities and dispensations reproduce a hegemonic discourse and that representational authority in diagnosing aid’s problems and prescribing solutions resides generally on one side of the aid binary. It thus focuses on the hierarchical or asymmetric relations of power implied by such a binary, on the way development aid in particular has come to shape self-understandings of donors in relation to recipients, and on the discursive labour that enables such a construction. It also explores how the post-Washington consensus on poverty eradication has embedded neoliberal solutions to development. The reproduction of the hegemonic aid discourse is examined in reference to NGOs involved in the dispensing of aid in Southeast Asia by drawing on scholarly literature and field research in Southeast Asia and Washington DC.     

Mediating multiple accountabilities: variation in formal and perceived accountability among international and domestic actors in the health sector in Peru

Based on a comparative case study of bilateral and multilateral donors, this article examines individual and institutional accountabilities among donor officers, implementing agencies, government officials and intended beneficiaries. It explores how multiple accountability demands interact, the extent to which they conflict, and how development actors mediate among them when they do. Institutionally there was substantial alignment of objectives and little goal conflict between international donors and the state; however, there was poor harmonisation across the many donors and numerous projects they were pursuing. There was greater variation within rather than between bilateral and multilateral donor chains, with perceived accountability differing more based on individuals’ positions within their organisation than by the type of organisation for whom they worked. Most informants cited multiple entities to whom they felt accountable. They more frequently acknowledged outward accountability when there existed formal accountability mechanisms, although intended beneficiary groups were conceptualised in different ways.     

The aid orphan myth

The term ‘aid orphan’ refers to a developing country forgotten or abandoned by the development community. This metaphor has featured prominently in the development assistance policy and research literature over the past decade. Development practitioners, policy makers and researchers have defined aid orphans in manifold ways and often expressed concern over the potential fate or impact of such countries. In this paper we first examine the many definitions of aid orphans and then review the main concerns raised about them. Next we empirically examine more than 40 years of bilateral aid data to identify aid orphan countries and their common characteristics. Our findings suggest that very few countries meet the definition of aid orphan and fewer still raise the concerns collectively expressed about the orphan phenomenon. We conclude by suggesting researchers and practitioners abandon the orphan metaphor and instead focus on issues of equitable aid allocation.     

Symbolic Gestures: The Development Terrain of Post-Tsunami Villages in (Southern) Sri Lanka

This article analyses how rituals and ceremonies were deployed in the post-tsunami rehabilitation process in Sri Lanka to ‘incorporate’ development projects into the habitus and social reality of local communities. It argues that even though the aid delivery process is represented as a gift, in reality it is more concerned with strengthening the social capital of the local and foreign donors. Through this process there is an expectation and an implicit demand for acquiescence from the beneficiaries, which leaves them with a social debt. This, in turn, compels them to participate in the game of development rituals and ceremonies, in order to express their (ambivalent) gratitude and thankfulness. Through two case studies, we explore how the good intentions of donors to provide aid and alleviate suffering and the acceptance of this aid by the local communities, results in an asymmetric relationship where both become accomplices of Bourdieuian notions of subtle and gentle violence.