Article

Development Aid and International Politics: Does Membership on the UN Security Council Influence World Bank Decisions?

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Abstract

We investigate whether elected members of the UN Security Council receive favorable treatment from the World Bank, using panel data for 157 countries over the period 1970–2004. Our results indicate a robust positive relationship between temporary UN Security Council membership and the number of World Bank projects a country receives, even after accounting for economic and political factors, as well as regional, country and year effects. The size of World Bank loans, however, is not affected by UN Security Council membership.

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... The IFI literature focuses primarily on US (sometimes G7) influence, with an emphasis on the chief global institutions, the IMF and the World Bank. Given the role of the IMF in managing large, high-stakes monetary crises, it is perhaps predictable that the US would play an out-sided, sometimes heavy-handed, role and studies both qualitative and empirical certainly bear this out (Stone 2002;Dreher et al. 2009bDreher et al. , 2018Copelovitch 2010). For the World Bank-a multilateral development bank focusing on medium-term economic development-the intrusion of geopolitics is less expected but nonetheless well documented (e.g., Gwin 1997). ...
... Politics intrude most obviously when the World Bank negotiates with donor countries for new money (Xu 2017), but there is also ample evidence that day-to-day lending decisions correlate with specific donor interests such as geopolitical alignments and United Nations (UN) voting. Among other issues, past research has found favouritism in World Bank lending toward countries making concessions to the US in UNGA voting (Kilby 2013a) and while they hold a seat on what is arguably the world's most powerful council, the UNSC (Dreher et al. 2009a). 6 Evidence of geopolitics impacting lending is problematic for the World Bank, not least because its charter expressly forbids this. ...
... This approach has been used to examine loan allocation, disbursement (Kilby 2013a), enforcement of conditionality (Kilby 2009), whether governance quality impacts the composition of lending (Winters 2010) and the role of recipient accounting practices in lending decisions (Lamoreaux et al. 2015). Dreher et al. (2009a) and Vreeland and Dreher (2014) demonstrate the relevance of UNSC membership, finding that World Bank borrowers get more loans per year while they serve as non-permanent members on the UNSC. Kilby (2013b) provides a mechanism for this UNSC effect, namely a shorter preparation period for projects of UNSC members. ...
Article
World Bank projects sometimes receive supplemental loans months or years after initial project approval. Largely unnoticed, supplemental lending has mushroomed in the last decade, accounting for nearly 30% of all new loans in some years. These loans can serve important functions, as they come without the bureaucratic delays associated with new projects. We argue that supplemental loans are potentially useful foreign policy tools for powerful donors in settings where time is of the essence. Consistent with this, we find that countries receive significantly larger supplemental loans while serving a two‐year term on the geopolitically important United Nations Security Council. L'essor des prêts supplémentaires au sein de la Banque mondiale. Les projets de la Banque mondiale peuvent parfois bénéficier de prêts supplémentaires plusieurs mois ou années après leur validation initiale. Passant très souvent inaperçus, ces prêts supplémentaires ont proliféré au cours des dernières décennies, représentant certaines années près de 30 % de tous les nouveaux prêts accordés. Échappant aux délais bureaucratiques afférents aux nouveaux projets, ces prêts peuvent revêtir d'importantes fonctions. Nous affirmons que les prêts supplémentaires représentent d'utiles outils de politique étrangère pour les puissants donateurs dans les situations où le temps constitue un élément crucial. Dans cette optique, nous constatons que les pays reçoivent des prêts supplémentaires bien plus importants lorsqu'ils siègent pour deux ans au Conseil de sécurité des Nations Unies, organe éminemment important au plan géopolitique.
... These controls help capture this importance using findings from the literature. First, we include an indicator for whether the recipient was a member of the UN Security Council in that year (Barthel et al. 2014;Bermeo 2017;Dreher, Sturm, and Vreeland 2009). We also include the recipient's natural resources endowment -the recipient's total natural resources rents relative to GDP in percentage terms -to capture its strategic economic value (Dreher , Nunnenkamp, and Thiele 2011). ...
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How do donor governments respond to recipient government violence against civilians? Violence against civilians undermines a common goal of aid: to reduce the risk and impact of instability or civil conflict. We show that donors care about recipient violence against civilians, under certain circumstances. We argue that government use of violence against civilians reduces aid allocations to recipient governments. Competition with other donors, especially rivals, however, will reduce donor sensitivity to government behavior. Testing these expectations on aid from 32 donors to 157 recipients between 1990 and 2013, we find that donors do respond to government violence against civilians but that this effect is conditioned by donor competition. Furthermore, this paper advances foreign aid scholarship by connecting the civil war literature to the strategic provision of aid literature and looking at an understudied form of government behavior in the aid and human rights literature: violence against civilians.
... Kuziemko and Werker (2006) show that U.S. strategically increases its aid to countries who rotates onto the U.N Security Council, especially when it needs to win members' votes for key international affairs. Membership of the U.N. security council is also found by Dreher, Sturm, and Vreeland (2009a) and Dreher, Sturm, and Vreeland (2009b) to influence the loan distribution by the World Bank and the International Monetary Fund. In line with this strand of literature, we find that political relations are an important driver for foreign aid allocation. ...
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... This gives us a deep awareness of the economic characteristics of the empirical setting considered in the empirical papers of our sample (Dreher, Sturm and Vreeland, 2009;Pisani et al., 2017). The first group (developing countries) is composed by low-income countries ($1,045 or less), the second group (emerging countries) includes countries with a middle income ($1,046-12,745), and the third group (developed countries) encompasses high-income countries ($12,746 or more). ...
Thesis
The work explores the role played by cities into the urban development considering i) the interception between the smart city context and the international marketing strategies ii) the impact of the promotion of a high-tech business environment on the attraction of knowledge and students in relation to the moderating effect of youth entrepreneurship in the city; iii) the relationship between Smart Mobility Practices and tourism flows in cities; iv) the (dis) advantages of inclusive, integrative and social urban practices on the creation of new business and the effect of intra- and inter-national human capital inflow. The core of the research aims to find connections between smart cities, city attractiveness, business environment, international marketing strategies, and human capital. The thesis consists of four peer-reviewed publications. The first chapter describes an overview of the thesis. The second chapter proposes a systematic literature review to discover the current literature trend and the fundamental base for further research. A quantitative analysis contributes to the research area with additional insights in the third, fourth and fifth chapters. The quantitative analysis uses the General Nesting Spatial (GNS) method, Generalized Method of Moment (GMM) methods, and Generalized Least Squared (GLS) methods to analyze a sample of 20 Italian cities. The purpose of this thesis is to contribute to the smart cities area by reviewing the current literature from an international perspective and analyzing the role of the city in the urban environment both in terms of business development and city attractiveness, using empirical evidence. Moreover, this thesis aims to take part in the debate on the implementation of smart cities by proposing new insights and opportunities for discussion, criticism, and support for further research.
... worldbank.org). This gives us a deep awareness of the economic characteristics of the empirical setting considered in the empirical papers of our sample (Dreher et al., 2009;Pisani et al., 2017). The first group (developing countries) is composed by low-income countries ($1,045 or less), the second group (emerging countries) includes countries with a middle income ($1,046-12,745) and the third group (developed countries) encompasses high-income countries ($12,746 or more). ...
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... According to Dr. Mey is a senior adviser to the Cambodia government's Supreme National Economic Council stressed and averred that without financial assistance from China, Cambodia may encounter so many issues [2]. were emphasized on development aid was often financed for political purposes rather than economic reasons [3] [4] [5] [6]. ...
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The effectiveness of foreign aid in stimulating economic development is a topic of intense debate in the scientific community and among policy analysts. Numerous empirical studies are devoted to investigating the impact of foreign aid on the economic growth/development of recipient countries. This study reviews the literature relevant to this debate using the bibliometric data of scholarly papers in the Scopus database. Our intention is to identify the trends of publications, their geographical distribution and the most influential journals, authors and articles in this field of research.
By explicating the mechanisms through which International Monetary Fund (IMF) programs operate, this study investigates the effect of IMF intervention on the shadow economy. Using a panel of 141 countries from 1991 to 2014 we examine the impact of both IMF participation and conditionality on the informal economy. Our analyses address sources of endogeneity related to, first, the IMF participation decision and, second, the conditions included within the program. The empirical findings suggest that both IMF program participation and conditionality increase the size of the shadow economy. Disaggregating IMF conditions into structural and quantitative shows that only structural conditions are significantly related to a larger shadow economy both in the short- and long-term. Financial development can reduce the size of the shadow economy, yet it cannot reverse the detrimental effect from IMF conditions. Our initial results are found to be robust across alternative empirical specifications.
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By exploiting a unique dataset on aid allocation by major Arab donors, this paper explores the relationship between aid allocation and the strategic alignment of donors with recipients as well as the developmental need of recipients. To motivate our empirical work, we first develop a new theory of aid allocation, wherein a representative donor country's payoff depends on both the well-being of the representative recipient country as well as its strategic alignment with the donor. Our theoretical model suggests that there exists a positive relationship between donor's aid allocation and the geopolitical & cultural alignment of the recipient country. Our model also predicts that donors allocate more aid to recipient countries with higher levels of country capacity. To test the prediction of our theory empirically, we construct a new measure of geopolitical & cultural alignment for recipient countries by using principal component analysis. We employ this measure and a set of control variables to show that the geopolitical & cultural alignment of a recipient country and its capacity to implement development projects are the key determinants of aid allocation from the Arab donors.
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In recent decades, many international organizations have become almost entirely funded by voluntary contributions. Much existing literature suggests that major donors use their funding to refocus international organizations’ attention away from their core mandate and toward serving donors’ geostrategic interests. We investigate this claim in the context of the United Nations High Commissioner for Refugees (UNHCR), examining whether donor influence negatively impacts mandate delivery and leads the organization to direct expenditures more toward recipient countries that are politically, economically, or geographically salient to major donors. Analyzing a new dataset of UNHCR finances (1967–2016), we find that UNHCR served its global mandate with considerable consistency. Applying flexible measures of collective donor influence, so-called “influence-weighted interest scores,” our findings suggest that donor influence matters for the expenditure allocation of the agency, but that mandate-undermining effects of such influence are limited and most pronounced during salient refugee situations within Europe.
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Identification of the causal effect that foreign aid has on the quality of institutions in recipient countries has been elusive in the aid effectiveness literature. The main reason is that aid is endogenous with respect to the development of institutions. Our paper examines the impact of foreign aid on economic freedom in the recipient countries at a disaggregated level using an innovative identifying strategy. To do so, we use recently innovated instruments for aid, exploiting the long lags between loan approval and disbursements by official creditors to developing countries. Using plausibly exogenous variations in predicted loan disbursements as instruments for actual aid, we find that foreign aid has a significant positive effect on the quality of economic institutions in recipient countries. The results are robust to alternative specifications and samples. By establishing the existence of a strong link between aid and the quality of economic institutions, we identify the main channel through which aid affects economic growth and development. JEL codes: O1, O4
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A principal agent model is used to test the hypothesis that when proposed uses of force attract the support of the United Nations (UN) Security Council, the rally in support of the American president increases significantly. Regression analysis is applied to rallies during all militarized interstate disputes from 1945 to 2001. Results show that UN Security Council support significantly increases the rally behind the president (by as many as 9 points in presidential approval), even after including an array of control variables. This finding is generally robust across most model specifications. This effect is unique among international institutions because other actions by the UN or regional security organizations do not significantly affect rallies. These findings provide new insight into how international institutions can matter and influence the foreign policies of states by affecting public opinion.
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The International Monetary Fund claims that its loan conditions are apolitically devised because loans are negotiated by the technocratic staff and away from the possibly politicized Executive Board. Previous studies have suggested IMF Executive Board politicization but have not analyzed internal IMF documentation. Recently released IMF Article IV Consultations from the IMF Archives provide the opportunity for a new methodology based on searching for slippages in staff recommendations. It was found that two lenient IMF–Egyptian agreements had considerable slippages and two strict IMF–Egyptian agreements had little evidence of slippages. It was further found that the United States intervened in both the 1987 and 1991 agreements by usurping staff recommendations and undermining negotiations to ensure that these two agreements were lenient. The United States intervened in the 1987 and 1991 negotiations to preserve the political stability of the pro-Western Egyptian regime during a particularly turbulent time.
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I examine if and how a superpower can use its asymmetric power to achieve favorable outcomes in multilateral bargaining between states that have conflicting interests and veto power. Using a game-theoretic framework, I show that the ability to act outside, either unilaterally or with an ally, helps the superpower to reach agreements that would be vetoed in the absence of the outside option. These agreements, however, are usually not at the superpower’s ideal point. Under some conditions, uncertainty about the credibility of the outside option can lead to unilateral action that all actors prefer to avoid. In other circumstances, this uncertainty results in multilateral actions that the superpower (and the ally) would not initiate without multilateral authorization. The model provides useful insights that help explain patterns of decision-making in the United Nations Security Council in the 1990s, including the failed attempt to reach agreement over the Kosovo intervention.
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Does the United States shape the content of International Monetary Fund conditionality agreements? If so, in pursuit of what goals does the United States use its influence? We present evidence that American interests do shape the content of IMF conditionality agreements. We find that American policymakers use their influence in the IMF to pursue American financial and foreign policy objectives. The IMF offers larger loans to countries heavily indebted to American commercial banks than to other countries. In addition, the IMF offers larger loans to governments closely allied to the United States.
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This article surveys the drivers behind the appeal of elected membership in the UN Security Council, some pitfalls for candidate states, and suggests some elements of both benefit and costs attaching to Council membership.
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Between 1990 and 1997, the United Nations (UN) was involved in broad range of activities in support of democracy in Haiti, including election-monitoring, UN Security Council (UNSC)-mandated sanctions, two peacekeeping operations (PKOs), a naval blockade, and UNSC-authorized use of force against the regime in power there. Much of this activity reflected the international concern over a military putsch which ousted Haiti's democratically elected president, Jean-Bertrand Aristide, in September 1991. Drawing on a detailed narrative of the UN's involvement in Haiti from 1990 to 1997, this inquiry seeks to answer the central question: how and why did the Security Council reach its decisions on the crisis (and on its aftermath, following the restoration of the legitimate government in 1994)?
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Why do governments turn to the International Monetary Fund (IMF) and with what effects? This book argues that governments enter IMF programs for economic and political reasons, and finds that the effects are negative on economic growth and income distribution. By bringing in the IMF, governments gain political leverage - via conditionality - to push through unpopular policies. Note that if governments desiring conditions are more likely to participate, estimating program effects is not straightforward: one must control for the potentially unobserved political determinants of selection. This book addresses the selection problem using a dynamic bivariate version of the Heckman model analyzing cross-national time-series data. The main finding is that the negative effects of IMF programs on economic growth are mitigated for certain constituencies since programs also have distributional consequences. But IMF programs doubly hurt the least well off in society: they lower growth and shift the income distribution upward.
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The purpose of this paper has been to develop a positive theory of international organization which can supplement the conventional normative theory used as a positive theory.The conventional approach draws much of its plausibility from the fact that it relies on the reasons given by the decision-makers and reported in the media, and on the lofty objections stated in the charters of international agencies. The public-choice approach, by its very nature, is precluded from accepting such evidence. In some respects, it must appear dismal and perhaps cynical.It is a positive theory which tries to explain. But just as the conventional normative theory tends also to be used as a positive theory, our positive theory is likely to have normative implications as well.It does not imply that international organization is generally undesirable. But it can be used to emphasize the advantages of decentralized policy making and to warn against a naive internationalism which welcomes international agreements for their own sake — regardless of what is being agreed upon. International organization can be and is abused, and the cause is not an occasional lack of virtue among politicians but a systematic built-in tendency toward collusion at the expense of the citizens. Such collusion is not only undesirable in itself. There is also the danger that it discredits and crowds out unambiguously desirable forms of international cooperation: agreements to remove non-market obstacles to market interdependence in the field of international trade and capital movements.
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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.
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The existence of an empirical relationship between the adoption of an IMF programme and the concession of a debt rescheduling by commercial creditors is tested using a bivariate probit model. If countries who have arrangements with the IMF are more likely than others to obtain a rescheduling of their external debt, we could conclude that the adoption of an IMF programme could work as a sort of signal of a country's “good intent” which is thus rewarded with the debt relief. The results confirm the existence of a significant effect of the adoption of an IMF programme on the subsequent concession of a debt rescheduling by private creditors.
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Analysis of adjustment loans often overlooks their repetition to the same country. Repetition changes the nature of the selection problem. None of the top 20 recipients of repeated adjustment lending over 1980–99 were able to achieve reasonable growth and contain all policy distortions. About half of the adjustment loan recipients show severe macroeconomic distortions regardless of cumulative adjustment loans. Probit regressions for an extreme macroeconomic imbalance indicator and its components fail to show robust effects of adjustment lending or time spent under IMF programs. An instrumental variables regression for estimating the causal effect of repeated adjustment lending on policies fails to show any positive effect on policies or growth.
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There is evidence that countries trade votes among each other in international institutions on a wide range of issues, including the use of force, trade issues, and elections of judges. Vote-trading has been criticized as being a form of corruption, undue influence, and coercion. Contrary to common wisdom, however, I argue in this article that the case for introducing policy measures against vote-trading cannot be made out on the basis of available evidence. This article sets out an analytical framework for analysing vote-trading in international institutions, focusing on three major contexts in which vote-trading may generate benefits and costs: (1) agency costs (collective good), (2) coercive tendering, and (3) agency costs (constituents). The applicability of each context depends primarily on the type of decision in question – i.e. preference-decision or judgement-decision – and the interests that countries are expected to maximize when voting. The analytical framework is applied to evidence of vote-trading in four institutions, the Security Council, the General Assembly, the World Trade Organization, and the International Whaling Commission. The application of the analysis reveals that while vote-trading can create significant costs, there is only equivocal evidence to this effect, and in several cases vote-trading generates important benefits.
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The International Monetary Fund’s structure and rules are based on the quota system that was constructed when the Fund was set up in 1946. Quotas affect contributions and resource availability at the Fund, access to resources, the distribution of Special Drawing Rights, and voting rights. Despite periodic reviews and modifications, the quota system has gradually been eroded and undermined. The fundamental problem is that a single system is attempting to serve four separate and incompatible functions. We illustrate how this erosion has taken place, and how an unreformed quota system will compromise the future operations of the IMF and the international monetary and financial system. Although the difficulties associated with reforming quotas are myriad and complex, the legacy of an unreformed quota system may be profoundly undesirable. We argue that a refined IMF structure must accommodate a clearer separation of a member’s contributions to the IMF, its access to IMF resources, and its voting rights at the institution.
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The politics of legitimacy is central to international relations. When states perceive an international organization as legitimate, they defer to it, associate themselves with it, and invoke its symbols. Examining the United Nations Security Council, Ian Hurd demonstrates how legitimacy is created, used, and contested in international relations. The Council's authority depends on its legitimacy, and therefore its legitimation and delegitimation are of the highest importance to states. Through an examination of the politics of the Security Council, including the Iraq invasion and the negotiating history of the United Nations Charter, Hurd shows that when states use the Council's legitimacy for their own purposes, they reaffirm its stature and find themselves contributing to its authority. Case studies of the Libyan sanctions, peacekeeping efforts, and the symbolic politics of the Council demonstrate how the legitimacy of the Council shapes world politics and how legitimated authority can be transferred from states to international organizations. With authority shared between states and other institutions, the interstate system is not a realm of anarchy. Sovereignty is distributed among institutions that have power because they are perceived as legitimate.
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The need to expand the UN Security Council is usually justified as necessary to update Council membership in light of changes in world politics. The mismatch between the existing membership and the increasingly diverse population of states is said to delegitimatize the Council. This rests on an implicit hypothesis about the source of institutional legitimacy. This article surveys reform proposals and finds five distinct claims about the connection between membership and legitimacy, each of which is either logically inconsistent or empirically implausible. If formal membership is indeed the key to institutional legitimacy, the causal link remains at best indeterminate, and we may have to look elsewhere for a theory of legitimation. We must also look for explanations for why the language of legitimation is so prevalent in the rhetoric of Council reform.
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Of the seeming and real innovations which the modern age has introduced into the practice of foreign policy, none has proven more baffling to both understanding and action than foreign aid. The very assumption that foreign aid is an instrument of foreign policy is a subject of controversy. For, on the one hand, the opinion is widely held that foreign aid is an end in itself, carrying its own justification, both transcending, and independent of, foreign policy. In this view, foreign aid is the fulfillment of an obligation of the few rich nations toward the many poor ones. On the other hand, many see no justification for a policy of foreign aid at all. They look at it as a gigantic boon-doggle, a wasteful and indefensible operation which serves neither the interests of the United States nor those of the recipient nations.
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1. NATO at the crossroads: an introduction 2. NATO burden sharing and related issues 3. On NATO expansion 4. NATO and peacekeeping 5. NATO and the defense industrial base: EU and USA 6. NATO: challenges on the horizon 7. NATO and Europe 8. NATO design 9. NATO: conclusions and future scenarios.
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In this paper I discuss three econometric problems that are rarely given adequate discussion in textbooks: model uncertainty, parameter heterogeneity, and outliers. I show how Leamer's extreme bounds analysis can be adapted to address all three problems simultaneously, and present two examples based on an influential cross-country growth paper by Levine and Renelt.
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The United Nations is under pressure to make the Security Council more representative of the membership. The formal literature on voting power has discovered much that can clarify this debate, and the present analysis gives a version of the Shapley-Shubik index of voting power that considers likely alliances based on voting in the General Assembly since the breakup of the Soviet Union. Veto members occupying outlying positions, like China, have especially high voting power, whereas states without vetoes hold almost none. However, power in itself is not the goal; if another permanent member is already reliably voting as one wishes, obtaining a veto of one's own is unnecessary. Other benefits from membership are prestige and access to information. The current debate seems at an impasse, but if these alternative goals are recognized, other feasible solutions might be found.
Book
The International Monetary Fund is a powerful international institution. Founded in the aftermath of World War II, its basic purposes were to facilitate world trade and promote national prosperity. The founders hoped that never again would the world experience the trade policies that led up to the Great Depression. Soon after its inception, the IMF became involved with developing countries. Over the course of the past 50 years, this involvement has grown so that most developing countries have participated in its programs of economic reform. These “IMF programs” grant governments access to loans, but this access can be swiftly cut off if the governments fail to comply with specific policy conditions. IMF conditional lending impacts the lives of individuals in intimate ways. The policy conditions address government expenditures, so IMF programs help determine whether roads, schools, or debt repayment take priority. By addressing interest rates and currency valuation, IMF programs may even impact the very purchasing power of the money in people’s pockets. Unfortunately, in terms of economic development, there is scant evidence of the success of IMF conditional lending.
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This article introduces a large new cross-country database, the Database of Political Institutions. It covers 177 countries over 21 years, 1975-95. The article presents the intuition, construction, and definitions of the different variables. Among the novel variables introduced are several measures of checks and balances, tenure and stability, identification of party affiliation with government or opposition, and fragmentation of opposition and government parties in the legislature.
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Several recent studies argue that positive incentives have become important policy instruments allowing states to meet their post-Cold War security challenges. The leading research question is the effectiveness and efficiency of incentives relative to (economic) sanctions. Whereas earlier work often treated incentives merely as weak sanctions, these studies present a theoretical perspective in which incentives become powerful instruments to turn conflict into cooperation. The essay is constructed around four major issues: (1) the comparison of the effectiveness of incentives and sanctions, (2) the identification of conditions under which incentives are effective, (3) the use of the comparative case studies method to test these conditions, and (4) the identification of policy implications. A principal argument in this essay is that incentives need to be distinguished very carefully from sanctions. Moreover, none of the studies derives the conditions under which we expect incentives to matter more than sanctions. The books are good examples of both the strengths and weaknesses of the comparative case studies method. Expert knowledge provides valuable insight into the various cases, but lack of logical and inferential constraint remains a problem. Nevertheless, the studies offer important policy lessons for the successful implementation of incentives. This essay suggests various ways in which research on sanctions and incentives could progress. In particular, older work by Knorr (1975) already proposes how sanctions and incentives can be distinguished. Finally, it is indicated how selection bias could have been avoided.
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This paper focuses on the boundaries of political sovereignty, one key aspect of global political justice and an important background condition to the issues of global economic justice treated in the other papers of this volume. I first present an interpretive summary of the traditional arguments against and for intervention, stressing, to a greater extent than is usual, the consequentialist character of the ethics of intervention. It makes a difference whether we think that an intervention will do more good than harm, and some of the factors that determine the outcome are matters of strategy and institutional choice. I then explore the significance of a key factor that makes for much of what is new in the new interventionism: the role of multilateral and particularly U.N. authorization and implementation. I argue that the more salient role of the United Nations should lead us to a more expansive tolerance of international intervention and that global standards of justice, both political and economic, can therefore be more widely enforced against claims to national autonomy.
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Computational assistance and useful suggestions from Ralf Seisreiner and Bernhard Boockmann are gratefully acknowledged. I also wish to thank Lord Bauer Sir Alan Walters for helpful comments. The analysis has shown that the World Bank, like the IMF, suffers from bureaucratic inefficiency and an increasing lack of external control. The growth of its staff exceeds the growth of comparable institutions (including even the IMF) by a wide margin even though it has been significantly restrained by the rise of real salary cost. At the same time, labour productivity at the World Bank seems to have declined. In the IMF and in the IBRD weakening of external control is significantly related to the dilution of voting power which has undermined the incentive of the major principals to check bureaucratic growth and waste. Moreover, the principals (the governments of the member states) are misled by hurry-up lending at the time of review: IDA tends to increase the change of its capacity utilisation when the Board of Governors is due to decide about the next replenishment, and IDA expressly refers to the resulting lack of unused lending capacity when asking for additional resources (cf., for example, the Annual Report 1968). Walters (1994, p. 14) reports that, for example under President McNamara, there was pressure on loan officers and regional departments to make sure they used up their funds and that their budgets, status, staffing and promotion depended on such a performance. If bureaucratic growth and waste at the World Bank are to be brought under control, decisions about staff size and staff salaries must be delegated to a small group of donor governments. Decisions about the Bank's administrative budget must no longer be left to the Executive Directors whose salaries, power and prestige depend on the Bank's administrative expenditure. They lack an incentive to control the Bank's spending because they benefit from it. By reducing bureaucratic waste and removing the pressure to lend, the governments of the member states could save resources and improve the quality of World Bank lending.
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Why did President Bush attempt to acquire a UN Security Council resolution authorizing the use of force before the war with Iraq, even though there was a substantial risk that his request would be rejected? This article presents a game-theoretic model to investigate how international institutions can shape the behavior of democratic leaders by influencing domestic politics. While it seems unsurprising that unbiased leaders who are truly concerned about foreign policy outcomes would consult international institutions, the results show that biased leaders with private agendas can also be forced to behave like the unbiased type because of their electoral concerns. The equilibrium results are illustrated with the cases of U.S. use of force in international crises.
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In parliamentary democracies, participating in government provides access to office perks and policy influence. Because of this, as Riker (1962) demonstrated, there is a powerful logic behind the formation of minimum winning coalitions. Thus, an important question is why we regularly observe oversized coalitions. While several theories of coalition formation have been proposed, few have been tested in competition with one another. This article offers a simultaneous test of five main theories of coalition formation using data from 24 countries over the period from 1955 to 1998. The weight of the evidence suggests that oversized governments form when maintaining coalition bargains is harder (Carrubba and Volden 2000). Also, there is mixed support for oversized governments forming when the largest party is smaller and more extreme (Crombez 1996), but not when the status quo policy is more extreme (Baron and Diermeier 2001) and not to secure upper-house majorities (Lijphart 1984; Sjölin 1993). Finally, while we descriptively observe oversized connected coalitions (Axelrod 1970), the logic behind their formation appears to differ from what Axelrod proposes.
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The paper discusses three econometric problems that are rarely given adequate discussion in textbooks: model uncertainty, parameter heterogeneity, and outliers. Leamer’s extreme bounds analysis can be adapted to address all three problems simultaneously. Two examples are presented based on an influential cross-country growth paper by Levine and Renelt (American Economic Review, vol. 82, 1992, pp. 942-63).
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The International Monetary Fund (IMF) and the World Bank (the Bank) are now regularly accused of being secretive, unaccountable and ineffective. Not only radical non-governmental organizations (NGOs) but equally their major shareholders are demanding that the institutions become more transparent, more accountable and more participatory. Accountability, in particular, has become the catchcry of officials, scholars and activists in discussing the reform of the institutions. Yet few attempts have been made to dissect the existing structure of accountability within the international financial institutions (IFIs), to explain its flaws and to propose solutions. That is the aim of this article. The first section examines the structure of accountability planned by the founders of the IMF and the World Bank. The second section discusses the defects in this structure. Section three analyses recent attempts to make the institutions more accountable. The conclusion offers some recommendations for improving the institutions, and a warning about the limits of accountability at the international level.
Article
This paper explores the influence of Japan and the United States over the geographic distribution of Asian Development Bank funds. Estimation using panel data for less developed Asian countries from 1968 to 2002 suggests significant donor influence with inconsistent weight placed on humanitarian criteria given limited funding for the region's largest countries, China and India. Comparing the results with research on World Bank loan allocation suggests donor interests are relatively more important in the ADB. This finding justifies the existence of the ADB on political grounds but calls into question its relative merits on economic grounds.
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This paper assesses the economic and political determinants of IMF and World Bank program loans to the Middle East and North Africa. First we assess what is already known about the geo-political influences on aid flows to the Middle East and North Africa (MENA) region and the potential for this to operate via the IMF and World Bank. From this we conclude that there is scope for IMF and World Bank lending in the region to respond to the political interests of their major shareholders, particularly the United States. We support these arguments with both a qualitative and a quantitative analysis of the determinants of World Bank and IMF program lending to the region, focusing on both economic need in the MENA countries and the politics of donor interest before concluding.
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We analyse the effect of World Bank and IMF policies on the composite index of economic freedom of Gwartney et al. [Gwartney, J., Lawson, R., Samida, D., 2000. Economic Freedom of the World 2000, Annual Report, http://www.freetheworld.com] as well as its sub-indexes, using a panel of 85 countries observed between 1970 and 1997. With respect to the World Bank, we find that the number of projects has a positive impact on overall economic freedom, while the effect of the amount of World Bank credits appears to be negative. These effects are stronger during the 1990s than in earlier periods. There is no clear relationship between credits and programs of the IMF and economic freedom as measured by the index.
Article
The foreign-policy behavior of weak states, conventional wisdom holds, is largely determined by a process of bargaining with a dominant state. Compliance with the dominant state's preferences is viewed as necessary to the maintenance of economic exchange relations that benefit the weak state. Evidence for such a theory has been found in cross-sectional correlations of aid and trade with UN voting. However, such empirical studies have ignored alternative explanations, overlooked elements of the statistical record, and failed to examine the logic of the bargaining model. The assumptions of the bargaining model are vulnerable to criticism; an alternative model emphasizes multiple constraints on the behavior of both the strong and the weak nation in an asymmetrical dyad. Reanalysis of the data uncovers strong evidence of an explanation for foreign-policy continuity rooted in dependency. Dependency permeates and transforms the political system of dependent nations, thus bringing about constrained consensus rather than compliance. Furthermore, the data provide strong evidence for an explanation of foreign-policy change in both nations that centers on regime change, not on bargaining with an external actor.
Article
Bargaining theory is used to evaluate the proposition that asymmetrical economic interdependence among states is a source of political power. It is shown that asymmetrical economic interdependence does not imply that less dependent actors will be able to exercise political influence over more dependent ones. The use of economic interdependence for political influence requires, instead, that the exchange of economic resources for political concessions make both parties to a relationship better off than they would be if they bargained over the distribution of the gains from the economic relationship alone. Whether this is true is independent of the degree of asymmetry in the economic relationship, or its direction. An explanation is given for the fact that other scholars have reached different conclusions, and the implications of these results for our understanding of a variety of types of relations among governments are derived.
Article
Practically all donor countries that give aid claim to do so on the basis on the recipient's good governance, but do these claims have a real impact on the allocation of aid? Are democratic, human rights-respecting, countries with low levels of corruption and military expenditures actually likely to receive more aid than other countries? Using econometric analysis, the author examines the factors that really determine the patterns of aid giving. The author analyses such examples as: Aggregate aid flows. Aid from multilateral organisations such as the EU and the UN. Aid from bilateral donors such as Germany, Japan, the US as well as Arab donors. This concise, well argued and well researched book will be a great read for students, academics and policy-makers involved in development studies, economics and international relations.
Article
World Development Indicators, the World Bank's respected statistical publication presents the most current and accurate information on global development on both a national level and aggregated globally. This information allows readers to monitor the progress made toward meeting the goals endorsed by the United Nations and its member countries, the World Bank, and a host of partner organizations in September 2001 in their Millennium Development Goals. The print edition of World Development Indicators 2005 allows you to consult over 80 tables and over 800 indicators for 152 economies and 14 country groups, as well as basic indicators for a further 55 economies. There are key indicators for the latest year available, important regional data, and income group analysis. The report contains six thematic presentations of analytical commentary covering: World View, People, Environment, Economy, States and Markets, and Global Links.
Article
Sixty years after their creation, the Bretton Woods institutions face a crisis of legitimacy that impairs their credibility and limits their effectiveness. At the roots of this crisis lies the unrepresentative nature of their structure of governance, which places control of the institutions in the hands of a small group of industrial countries. These countries consider the developing countries and economies in transition as minor partners, despite the fact that they now account for half of the world's output in real terms, most of the world's population, encompassing the most dynamic economies and the largest holders of international reserves. Over time, the effects of the unrepresentative nature of the governance of the BWIs have become aggravated by two trends: First, a growing division among member countries, on the one hand, industrial country creditors who do not borrow from the institutions but largely determine their policies and make the rules and on the other, developing country debtors or potential debtors, subject to policies and rules made by others. Second, the rapid increase in the economic size and importance of developing countries, particularly, emerging market countries in the world economy. This has made the governance structure of the institutions, which reflects the political accommodation reached at the end of World War II increasingly obsolete. The first part of the paper reviews the existing governance structure of the institutions, the foundations on which it rests, the main formal proposal to reform quotas, its shortcomings and major issues that were not addressed by it.
Book
During the last few decades, human dynamics, institutional change, political relations, and the natural environment have become successively more intertwined. While the increased global economic integration, global forms of governance, globally inter-linked social and environmental developments are often referred to as "globalisation," there is no unanimously-agreed upon definition of the term. Depending on the researcher or commentator, it can mean, among other things, the growing integration of markets and nation-states, receding geographical constraints on social and cultural arrangements, the increased dissemination of ideas and technologies, the threat to national sovereignty by trans-national actors; or the transformation of the economic, political and cultural foundations of societies. Regardless of perspective, globalisation permeates our economic, political, and social institutions to a profound degree. Recently, the issue of "sustainability" has reached the mainstream: are the forces of globalisation ultimately contributing to growth and opportunity—or to destruction and chaos? Against the chorus of globalisation’s proponents and detractors, the authors propose an approach for measuring globalisation and its consequences. Undertaking a comprehensive review of the literature on globalisation and using data from the MGI and KOF indices, the authors build a framework for defining globalisation and analyzing the relationships among economic, political, and social variables. In particular, they apply the methodology to analyze the effects of globalisation on tax policy, government spending, economic growth, inequality, union power, and the natural environment and consider additional avenues for research, analysis, and decision making. In the process, they hope that by introducing objective measures to enhance our insight into the functioning of the complex global system.
Article
Ten of the 15 seats on the U.N. Security Council are held by rotating members serving two-year terms. We find that a country's U.S. aid increases by 59 percent and its U.N. aid by 8 percent when it rotates onto the council. This effect increases during years in which key diplomatic events take place (when members' votes should be especially valuable), and the timing of the effect closely tracks a country's election to, and exit from, the council. Finally, the U.N. results appear to be driven by UNICEF, an organization over which the United States has historically exerted great control.
Article
In this paper, we test the argument that the sizeable reduction in aggregate aid levels in the 1990s was due to the end of the Cold War. We test two different models using a dynamic econometric specification on a panel of 17 donor countries, spanning the years 1970-97. We find aid to be positively related to military expenditures in the former Eastern Bloc during the Cold War, but not in the 1990s, suggesting that the reductions in aid disbursements are driven by the disappearance of an important motive for aid. We also study the effect on aid allocation, but here we do not find any robust effects of the end of the Cold War.
Article
The study develops an index of globalization covering its three main dimensions: economic integration, social integration, and political integration. Using panel data for 123 countries in 1970-2000 it is analysed empirically whether the overall index of globalization as well as sub-indexes constructed to measure the single dimensions affect economic growth. As the results show, globalization indeed promotes growth. The dimensions most robustly related with growth refer to actual economic flows and restrictions in developed countries. Although less robustly, information flows also promote growth whereas political integration has no effect.
Article
This article investigates the effect of a domestic policy choice, the exchange rate regime, on countries' interaction with an international institution, their participation in International Monetary Fund (IMF) lending agreements. I hypothesize that the effect of the level of international reserves on a country's probability of participation in an IMF program depends on the exchange rate regime. A low level of international reserves threatens unfavorable economic and political outcomes only in countries that maintain a fixed exchange rate regime. The level of reserves may thus be a significant determinant of participation in IMF programs only for countries that maintain a fixed exchange rate regime. I use a dynamic univariate probit model of IMF program participation to assess empirically the effect of reserves in countries that maintain fixed, intermediate, and floating exchange rate regimes. The empirical results support my hypothesis: reserves have a significant effect only in countries that maintain a fixed exchange rate. Copyright 2005 by The Policy Studies Organization.