Is two better than one? The effects of IMF and World Bank interaction on growth

We estimate the impact on economic growth of the joint participation in both IMF and World Bank programs. More specifically, using panel data for 128 developing countries over the period 1982?C2005, and employing 2SLS to control for the possible endogeneity of participation in an IMF/World Bank program, we find that the interaction between these two organizations has a positive and significant impact on growth. The paper then opens up interesting new research questions related to investigate further on the effects of Bank?CFund simultaneous action and, to the extent to which their stronger impact on growth may depend on Bank?CFund interaction, also ways to optimize their joint effect through greater cooperation.     

The International Monetary Fund and the World Bank. In need of a better performance?

Since the Mexican crisis in 1994, international financial markets are characterised by frequent turbulence. The two most important international organisations in that field, the World Bank and the International Monetary Fund, have been unable to provide sufficient stability. Surprisingly, the World Bank is in deeper trouble than the IMF. The decreasing importance of public capital flows has made the World Bank much less important than it used to be. Globalisation has led to increased private flows to the developing world, primarily in the form of foreign direct investment. In the long run, there will not be an important function for the World Bank any more. The opposite assessment has to be made for the IMF. The more globalisation progresses, the greater the need for an IMF. However, this does not mean that the Fund will survive in its current form. International financial markets have gained in importance, but they still lack many of the features that characterise the national financial sector. If globalisation shall be continued, we need those governance structures, e.g. a lender of last resort, at the international level. Markets need rules and regulations, and today these are often not existent at the international level. The need for an IMF will even rise, but it will have to be a different one.Abbreviations  CCL Contingent Credit Line - IMF International Monetary Fund - LTCM Long-term Capital ManagementSenior Research Associate, German Institute for International and Security Affairs, Berlin, and Associate Fellow, Centre for the Study of Globalisation and Regionalisation, University of Warwick.     

Poverty Reduction Strategy Papers and the rhetoric of participation

The World Bank and IMF have proposed the Poverty Reduction Strategy Paper (PRSP) framework for all poor countries as a condition of receiving unconditional debt relief under the HIPC Initiative. The PRSPs will also be the key vehicle for the World Bank and IMF and other donors for various assistance packages, including loans. Like its predecessors, the PRSP framework promotes the ideas of ‘participation’ and ‘ownership’. This article argues that ownership of such a grand framework cannot possibly rest with the poor countries or their people if the whole idea is the product of World Bank and IMF think-tanks. It discusses participation in the development of Bangladesh's PRSP and argues that neither participation nor ownership was the target in preparing a national poverty-reduction strategy: they were merely necessary components of a document required for the continuation of debt and lending relationships with the World Bank and IMF.     

Judicial reform and international legal technical assistance in Latin America

In Latin America judicial reform is crucial to both economic liberalization and democratization including the advancement of the rule of law and human rights agendas. The World Bank, the Inter‐American Development Bank, the United States Agency for International Development and other donors have responded with international legal technical assistance to a variety of projects, in pursuit of a number of different objectives. But for the most part governance improvements and economic concerns have been uppermost, reflecting the prominent position of the World Bank. The situation has both advantages and disadvantages. The future of judicial reform in the region will depend on the capacity to build a political consensus on the way forward, not just among donors but within the societies themselves.     

The Socioeconomic Impacts of Structural Adjustment

The 1980s were painful years of structural adjustment during which many developing countries abandoned statist economic models in favor of market-oriented paradigms. The proponents of structural adjustment, including international lending agencies such as the IMF and World Bank, argued that reforms were necessary to restore growth and curtail inflation. The opponents of adjustment claimed its macroeconomic results were not a foregone conclusion and, regardless of them, such changes would drastically affect the already precarious position of the poor. We use data from sixteen Latin American cases to examine the socioeconomic impacts of structural adjustment. Adjustment was weakly associated with growth, and reform did seem to reduce inflation. Counterintuitively, the extent of structural adjustment appears to be negatively associated with both poverty and inequality. Finally, empirical data show that low levels of growth or even mere economic stability are the best remedy for poverty and inequality.     

Finding out rapidly: A soft systems approach to training needs analysis in Thailand

Thailand is experiencing the unfamiliar phenomenon of aid and multilateral agencies such as the World Bank and Asian Development Bank lending money for internal development programmes. In the economic boom years, aid was neither sought nor required since structural development was funded from the growth which South-East Asian countries had begun to take for granted. Today, falling growth and rising unemployment linked to a depreciating currency and weak export markets have meant that Thailand has had to look elsewhere for development capital and to become proficient in managing educational projects. This article describes a rapid training needs analysis of the Thai educational sector commissioned by the British Council, the purpose of which was to discover the capacity of the education sector to undertake and deliver externally funded projects. Using the Kolb learning cycle as a paradigm of good practice, and an adapted version of the soft systems approach to planning, the paper describes a learning process for developing an action plan to produce a training package for enhancing project management skills. Finally, the paper reflects on the experience of the project and sets out some learning objectives for future exercises of this type.     

The Catalytic Effect of IMF Lending: Evidence from Sectoral FDI Data

Our study contributes to the search for the elusive catalytic effect of International Monetary Fund (IMF) lending on inflows of foreign direct investment (FDI). Recent scholarship has found that the catalytic effect is conditional on political regime and program stringency. We contribute to this literature by developing and testing a theory which describes how the catalytic effect also varies by economic sector. This is a departure from existing studies, which have tended to focus on aggregate FDI flows after crises. Our findings corroborate previous research, which finds that in general IMF lending has a substantial and negative effect on FDI. However, we find that the negative effect is concentrated in sectors that are highly dependent on external capital and have low sunk costs in the host country. Our findings are robust to several alternative explanations common in IMF literature, namely the importance of IMF program design and the ability of governments to make credible commitments to reform. Substantively, our findings suggest that investors are more likely to use IMF lending as an escape hatch in countries where FDI is dependent on external capital and has low sunk costs.     

Governance of the Amman water utility

In 1993 the World Bank assisted the Ministry of Water and Irrigation of Jordan in updating a review of the water sector, and thus began the process of Private Sector Participation (PSP) in service provision to improve the efficiency of the water sector and wastewater services. In this article, the privatisation of water and wastewater services is examined from the perspectives of stakeholders (input) and consumers (output). The goal is to assess the changes that have been taking place to date in relation to the principles of good governance. The results from interviews with stakeholders and from consumer questionnaires show that the privatisation process has to date shown only a few signs of ‘good’ governance. Despite the range of stakeholders involved, the state remains responsible for designing a good-governance approach that is responsive to the concerns and interests of all stakeholders.     

Jordan: Between the Arab Spring and the Gulf Cooperation Council

The Arab Spring has fundamentally shifted the strategic balance in the Middle East. As all sides rush to ensure that their interests will be secured, the Hashemite Kingdom of Jordan has emerged as a key battleground between those who would like to see a more democratic region, and those who would like to maintain economic stability. On one side of this debate is the Gulf Cooperation Council, led by Saudi Arabia, that views democratic reform as a threat to economic stability. On the other side are the forces of the Arab Spring, which have called for political reform in states such as Egypt, Syria, and Libya, even if these reforms come at the expense of stability. This article examines the various forces, both domestic and international, that are attempting to influence Jordan, and through it, the balance of power in the Arab World.     

印度尼西亚：2012～2013年回顾与展望

2012年,印尼政治、经济延续了2011年的发展态势,政治社会形势总体稳定、党派斗争加剧、暴力冲突时有发生。在经济方面,在世界经济萎靡和疲软的环境下仍然保持了宏观经济的稳定、较低的通胀率和较高的经济增长率。2013年,印尼政府仍面临国内外政治经济形势的诸多不确定性,主要国际机构和印尼央行对2013年印尼的经济预期乐观,私人消费和投资仍将成为2013年经济增长的主要引擎。随着世界经济缓慢复苏以及主要贸易伙伴经济增长的提高,出口对经济增长的作用将好于2012年。     

Reinvigorating the Bretton Woods Institutions： Traditional and Rising Powers＇ Debate on the Issues and Stakes

Introduction：
Throughout modem history, the Intemational Monetary Fund （IMF） and the World Bank, commonly referred to as the Bretton Woods Institutions （BWI）, have waned in and out of importance to the global economic system. Created in 1944, both organizations were to have specialized roles in intemational economic govemance. The IMF would address exchange rate cooperation, liberalization of international payments and balance of payments adjustments; the World Bank would address capital investment, development, and long-term project lending. While both organizations would face repeated crises of purpose and legitimacy throughout their modem history, the recent sidelining of the BWIs in the aftermath of the Asian crisis would raise the awareness of world leaders of the need to address relevance of their mandates in their evolving global setting. At the tum of the century, the BWIs were declared irrelevant.     

Organizational reform and the rise of trust funds: Lessons from the World Bank

Over the past two decades, earmarked funding to international development organizations through special-purpose trust funds has increased greatly. This paper studies the incentives for trust funds from the perspective of multilateral agencies, notably the World Bank. A theoretically intriguing type of funds are so-called “pass-on funds,” in which one unit hosts the fund, then passes on its resources to another type of unit for implementation. Each unit has different preferences for the specific types of activities to be supported by the fund. Interviews with World Bank staff and complementary documents demonstrate the rationale for pass-on funds and the associated division of labor between fundraising network units and implementing regional units. While pass-on funds reflect an efficient division of labor between functionally specialized units, they increase the misalignment between sector-specific global priorities and country-specific needs. Organizational reform drove the sudden explosion of pass-on funds around the millennium turn, facilitated by growing availability of donor monies for specific sectors and by lenient internal regulation. Organizational reform undermined budget autonomy of sector units, causing those units to seek new funds in their areas of expertise. A number of reform features also reduced administrative budgets of country units, increasing their demand for pass-on funding grants. The results contribute to the emerging literature on earmarked funding and highlight the need to consider international organizations as heterogeneous actors.     

二十国集团在全球治理结构中的角色分析

二十国集团作为国际经济合作的主要平台,要在全球经济治理中发挥核心作用,需要处理好与其他国际机构的关系。二十国集团取代了八国集团在国际经济合作中的地位,并相对明确地划分了各自的议题领域;帮助国际货币基金组织和世界银行筹措资金,推动它们进行配额改革,并取得一定进展;承诺抵制贸易保护主义,推动世界贸易组织多哈回合谈判尽快结束;正努力与联合国建立互利合作的关系。     

Does Membership on the UN Security Council Influence Voting in the UN General Assembly?

Recent studies report that temporary members of the UN Security Council receive favorable treatment from the IMF, the World Bank, or in US foreign aid in exchange for their political support for permanent members. Nevertheless, few studies have examined whether this favorable treatment and these benefits have actually made any significant changes in the member states’ voting behavior in the United Nations. To explore this question, we investigate whether membership on the UN Security Council influences a state’s voting in the UN General Assembly. In the analysis of panel data for 197 countries over the period from 1946 to 2008, the empirical results show that elected members of the UN Security Council tend to behave similarly with permanent members, especially with the United States, as the number of loan programs signed with the IMF and the World Bank increases. Also, US foreign aid significantly increases temporary members’ vote coincidence with the United States and other permanent members. In this regard, this article contributes to our understanding of state voting behavior and power politics in international organizations.     

Recruiting and diversifying IMF technocrats

This article examines the International Monetary Fund's recruitment policies and reveals internal debates on diversifying the organisation. It has often been argued that the IMF economist staff are technocrats proposing common policy solutions to economic adjustment because of their shared knowledge and training. These ‘econocrats’ are argued to be monolithic in their thinking and background and a part of the ‘Washington Consensus’ on economic policy reform. Consequently, the Fund has often been viewed as an insular and inbred organisation that lacks diversity. But how has the IMF approached diversity? Are the IMF ‘econocrats’ really similar? These questions are answered by examining 15 years of IMF documents on staff recruitment newly released upon request from the IMF archives. In addition, numerous personal interviews with IMF staff members and executive directors give insight into this powerful institution's organisational dynamics.     

Post-war aid: patterns and purposes

A recent report by the World Bank reiterates the widely held view that donor agencies commit large amounts of funding in the immediate post-conflict phase, only for this to taper off to more ‘normal’ levels once the crisis is over. The World Bank criticises this phenomenon, referred to as ‘frontloading’, claiming that it damages the prospects of economic growth, which in turn undermines the peace. This article argues that the Bank's analysis is flawed because it does not distinguish between commitments and disbursements, or take sufficient account of other factors influencing aid patterns over time and in different settings. Moreover, the link between official aid and post-war economic performance is of only marginal significance. Any critique of aid policies needs to be based on a detailed analysis of what is delivered rather than what is promised, and of the impact of donors' assistance on the ground.     

Transforming security sectors: the IMF and World Bank approaches

Since the end of the Cold War, donors have come to realise that when security sectors operate autonomously, with scant regard for the rule of law, democratic principles, and sound management practices, sustainable, poverty-reducing development is extremely di?cult, if not impossible, to achieve. Because of the substantial ?nancial resources and technical expertise at their disposal, there is a growing expectation that the World Bank and the International Monetary Fund will play an important part in supporting improved security-sector governance. These organisations have, however, long taken the position that, because of restrictions on political activities in their Articles of Agreement, their involvement in issues pertaining to the security sector must be limited. This article suggests that a governance approach to the security sector is well within the mandate of both organisations. And it is necessary for the Bank and the Fund to address the quality of security-sector governance if they are to be e?ective in carrying out two of their core functions: reforming public institutions and strengthening governance.     

IMF program compliance: Aggregate index versus policy specific research strategies

Consensus has grown that the economic reform programs of the International Monetary Fund (IMF) have failed to promote economic development. There is little consensus about how IMF programs should be reformed, however, because we do not understand why IMF programs have failed. Some critics contend that the IMF’s austere policy conditions are inappropriate for most program-countries and cause economic crises to deepen. Other critics argue that the policy conditions are actually ignored, and the IMF program loan ends up subsidizing the bad policies that caused the economic crises in the first place. This debate begs the compliance question. Unfortunately, the study of IMF compliance is not straightforward. IMF agreements span many dimensions, and the dimensions vary from agreement to agreement. Even along one dimension, governments are not held to the same standard. Rather than look at aggregate measures of compliance, this article proposes a return to studying specific conditions as was done in the earliest studies on IMF compliance.      

Political Trust,Corruption, and Ratings of the IMF and the World Bank

There are only a handful of studies that examine public support for the IMF and World Bank. Public opinion data on attitudes to the economy feature prominently in these studies. Utilizing data from the Afrobarometer survey, we find that evaluations of the economy, ideology, and a range of sociodemographic factors including age, gender, employment status, health, education, and living conditions are not significantly related to ratings of effectiveness. Rather, we find that political trust and corruption—two very important concepts in the wider literature on individual-level attitudes toward international relations and foreign policy issues—are strongly associated with ratings of effectiveness.     

A Nested Game Approach to Political and Economic Liberalization in Democratizing States: The Case of South Korea

South Korea enjoyed high rates of economic growth until the mid–1990s. However in mid–1997 the country went into a severe economic crisis which ultimately resulted in a request for an IMF bailout. Leading up to the crisis, the government had embarked upon democratic liberalization but not much economic liberalization. This research explores why the government would lay the foundation for political reform without creating institutions capable of imposing economic reform on the politically powerful business sector. The absence of such institutions put the government in a position where it could not respond to the emerging economic crisis. The government's inability to act eroded its own position of power and governance. From this perspective, the government's inattention to economic reform appears irrational as it led to a weakening of its own position. We build a model of political and economic liberalization showing that the government was engaged in nested games (i.e., games in multiple arenas) with the political opposition, the labor unions, and the powerful business sector. We develop an argument that strong, antiliberal economic actors create incentive for the government in a democratizing state to refrain from economic liberalization, even while moving forward with democratic liberalization.