The Effectiveness of Policy Conditionality: Eight Country Experiences

Abstract

This article analyses the effectiveness of the setting of policy conditions in exchange for aid. Given the emerging consensus that this process is not effective, this article focuses on explaining why not. In analysing the experiences of eight countries -Bangladesh, Cape Verde, Mozambique, Nicaragua, Tanzania, Uganda, Vietnam and Zambia -an 'augmented' principal-agent framework proved valuable in explaining why policy conditionality is not effective in these countries. The article concludes that donors should focus on some simple policy outcomes (ex post) instead of extensive policy conditions (ex ante).

Quality of governance and effectiveness of protected areas: crucial concepts for conservation planning

“…93 The increasing criticism that donor funds have not always been effective has led to debate about whether selectivity or conditionality should be used in allocating the aid. Conditionality involves setting policy conditions for aid 94 so that recipient countries have to carry out certain policies or reforms in order to receive the aid (ex ante). Selectivity, on the other hand, involves choosing which countries will receive aid, and is therefore more a mechanism for rewarding good performance: a country first has to perform and will only then qualify for aid (ex post).…”

Aid as a Catalyst: A Rejoinder

“…I rejected this alternative in my paper, but the question may arise whether, if aid conditionality is meeting so many problems in practice, country selectivity would not qualify as an acceptable second best. This is the position taken by Geske Dijkstra who, on the basis of a number of international studies, concludes that compliance with the policy conditions set by the Bretton Woods institutions is rather limited (Dijkstra, 2002). Dijkstra explicitly turns around the adjectives in my original central conclusion by stating: 'Well-focused aid selectivity is better than rigid selectivity ' (ibid.…”

Eficacia Agregada De La Ayuda: Incidencia Sobre El Crecimiento Del Receptor/ Macroeconomic Effectiveness of Aid: Impact on Recipient´s Economic Growth

“…No parece, sin embargo, que estos propósitos fueran debidamente alcanzados a través de esta vía. De hecho, hay un amplio consenso en juzgar como insatisfactoria la práctica de la condicionalidad, tal como fue aplicada por el FMI y el Banco Mundial, por entender que es difícil que las políticas puedan ser eficazmente impuestas desde el exterior (Dollar y Svensson, 2000, Dijkstra, 2002y Svensson, 2003.…”