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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. ...
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). ...
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. ...
Using donor-recipient aid data from 1973 to 2013, we find that while donors reward good relationship with more foreign aid, recipients sweeten their political relations with donors only after aid cuts. The negative impact of aid on political relations is more pronounced after the Cold War, in politically stable regions, and in countries where China and U.S are both donors. We provide evidence that the competition for influence among donors with distinct political pursuits and the conflicts in aid implementation are driving the results.
... 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). ...
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). ...
Smart cities and their internationalization process and efforts in order to gain the competitive advantage in the international arena have received a great deal of attention by marketing scholars and practitioners alike. Yet, the growing number of studies focused on this topic has led to considerable fragmentation and theoretical confusion.
To move the domain forward, this study applies the systematic review methodology and reviews 41 peer-reviewed articles published in highly esteemed publication outlets.
Building on the antecedents–phenomenon–consequences framework, the authors discuss the antecedents and consequences of the various innovative marketing strategies that smart cities adopt for their internationalization and development of an international competitive advantage. In the process of doing so, the authors synthesize the findings of the studies as well as literature gaps that provide fruitful avenues for future research.
This article offers a systematic review of extant marketing research on smart cities and their efforts to internationalize. In particular, this study advances the conceptual development of smart city internationalization and innovation by a marketing lens, provides an integrative, international-oriented framework that maps the extant literature across disciplines and countries, expands the boundaries of this research domain into new research paths and offers implications for policy and practice.
... 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 . were emphasized on development aid was often financed for political purposes rather than economic reasons    . ...
Why do states build new international organizations (IOs) in issue areas where many institutions already exist? Prevailing theories of institutional creation emphasize their ability to resolve market failures, but adding new IOs can increase uncertainty and rule inconsistency. I argue that institutional proliferation occurs when existing IOs fail to adapt to shifts in state power. Member states expect decision-making rules to reflect their underlying power; when it does not, they demand greater influence in the organization. Subsequent bargaining over the redistribution of IO influence often fails due to credibility and information problems. As a result, under-represented states construct new organizations that provide them with greater institutional control. To test this argument, I examine the proliferation of multilateral development banks since 1944. I leverage a novel identification strategy rooted in the allocation of World Bank votes at Bretton Woods to show that the probability of institutional proliferation is higher when power is misaligned in existing institutions. My results suggest that conflict over shifts in global power contribute to the fragmentation of global governance.
The previous literature finds that self-reported ‘fear of failure’ has a significant negative effect on individuals’ choice to become entrepreneurs. We hypothesize this effect is lessened in economies with a larger number of additional, alternative, entrepreneurial opportunities to pursue if a failure occurs. Prior literature also concludes the number of entrepreneurial opportunities is enhanced significantly by having policies and institutions consistent with higher levels of economic freedom. We therefore test and confirm that fear of failure hurts the entrepreneurial process less when levels of economic freedom are higher as there are more additional chances for failed entrepreneurs to pursue.
In this paper we explore the factors that determine delegation of implementation in project aid. In particular, focusing on the importance of informational asymmetry between levels of government, we empirically assess whether this choice is influenced by the relative importance of the local information at the recipient country level. Moreover, we test whether this choice can in turn influence project performance. Using information on more than 5800 World Bank projects for the period 1995-2014, and controlling for characteristics at both country and project level, we find that transparency does influence the probability that a project is implemented locally rather than nationally. More specifically, a one standard deviation decline in transparency increases the probability of a locally implemented project by three percentage points. We also find that a local implementing agency may increase the probability of a successful project only up to a certain level of a country’s transparency.
Globalization is an inevitable integrating process and vital to the world economy but it generates many challenges towards the integration of “economic independence” of the nation states like (a) economic integration through investment/trade and capital flow, (b) initiating multilateral political interaction between the countries, and (c) diffusion of dominant cultural values and beliefs over other cultures. globalization accelerates structural change, which alters the industrial structure of host countries, for instance the excessive use of natural resources and contributes to the physical environmental deterioration. Further, globalization transmits and magnifies market failures and policy distortions if not properly addressed. The chapter attempts to (a) identify the key links between globalization and environment deterioration, (b) identify some issues in multilateral economic agreements in trade, finance, investments, and intellectual property rights that affect environmental sustainability, (c) identify and review priority policy issues affecting multilateral economic agreements on environment issues.
In this analytical essay, we advance a simple but powerful claim: scholars can better understand outcomes of international organizations (IOs) by developing theories that explicitly make assumptions about legislative process. Because process assumptions powerfully explain domestic legislative outcomes and many international assemblies demonstrate similarities to domestic legislatures, scholars could usefully employ legislative-process-centric approaches when theorizing about outcomes in world politics. Following an explication of why scholars might focus on legislative procedure, we describe several legislative procedures and highlight variance across those procedures within several well-known IOs. We also suggest that this variance and the shadow of power politics cast over IOs provides fertile ground for comparative legislative scholars—including scholars of the U.S. Congress—to develop and test new theories of legislative procedure.
This paper investigates the impact of World Bank policy lending on the quality of economic policy. A new econometric specification distinguishes among two effects that have been conflated hitherto: (i) marginal impacts of additional policy actions and (ii) the length of the policy engagement. Panel estimations on a revised data set indicate that development policy financing has a positive effect on the quality of economic policy. Results are robust to the use of different estimation techniques, sample restrictions, the inclusion of additional controls, omitted variable bias adjustment, a placebo test and a compound IV strategy. Next, the econometric work suggests that the quality of the engagement matters more than the sheer number of policy actions. We provide several arguments of why the process of engagement is key. Finally, there is evidence that longer engagements lead to lower policy impacts, which may be related to a change to more complex, second‐generation reforms.
Social assistance in developing countries is substantially funded and supported by international organizations and donors which have the power to influence the design and implementation of social policies. On the one hand, international financial institutions (IFIs) may have their own preferences for which types of programs to implement and which groups of the poor population to support. On the other hand, they may favor certain elements of the design, such as a targeting method or conditionalities because of interests which include not only short-term emergency aid but also long-term sustainable development and human capital accumulation. Using the recent data sets on non-contributory social transfer programs, we examine the types and designs of social programs promoted by international donors. We discuss to what extent such results may be strategic and depend upon donor policy priorities.
How do policies in international organizations reflect the preferences of powerful institutional stakeholders? Using an underutilized data set on the conditions associated with World Bank loans, we find that borrower countries that vote with the United States at the United Nations are required to enact fewer domestic policy reforms, and on fewer and softer issue areas. Though U.S. preferences permeate World Bank decision making, we do not find evidence that borrower countries trade favors in exchange for active U.S. intervention on their behalf. Instead, we propose that U.S. influence operates indirectly when World Bank staff—consciously or unconsciously—design programs that are compatible with U.S. preferences. Our study provides novel evidence of World Bank conditionality and shows that politicized policies can result even from autonomous bureaucracies.
Contemporary studies of conflict have adopted approaches that minimize the importance of negotiation during war or treat it as a constant and mechanical activity. This is strongly related to the lack of systematic data that track and illustrate the complex nature of wartime diplomacy. I address these issues by creating and exploring a new daily-level data set of negotiations in all interstate wars from 1816 to the present. I find strong indications that post-1945 wars feature more frequent negotiations and that these negotiations are far less predictive of war termination. Evidence suggests that increased international pressures for peace and stability after World War II, especially emanating from nuclear weapons and international alliances, account for this trend. These original data and insights establish a dynamic research agenda that enables a more policy-relevant study of conflict management, highlights a historical angle to conflict resolution, and speaks to the utility of viewing diplomacy as an essential dimension to understanding war.
We analyze the impact of EU funds on the outcomes of Polish mayoral elections in 2010 and 2014. We employ an instrumental variable approach to account for the endogeneity of EU funds. Our instruments approximate the availability of EU funds. The first instrument builds on the alignment of the local electorate with the regional donor government. The second instrument uses the funds spent in municipalities in the same sub-region dropped from the sample because the mayors do not run again. We do not find convincing empirical evidence in favor of the notion that EU funds increase the vote shares of mayors. We go on to test whether the electoral effect of EU funds is conditional on the attitude towards the donor institution among the population in the recipient population. This conditional factor is under-researched and politically virulent – given citizens' skepticism towards the EU that Krastev (2017) describes for Central and Eastern European EU members. Our results are affirmative. EU funds increase the vote shares of mayors in municipalities where Krastev (2017) predicts the degree of EU skepticism to be low while they are not found to do so in municipalities where EU skepticism is predicted to be widespread. These results suggest that citizens’ attitudes towards the donor of vertical grants determine the political gains of recipients from using them.
Scholars have pointed to the period 1958-1962 as the beginning of Taiwan's transition to export-oriented industrialization. Although the Nationalist Party (KMT) had traditionally supported state socialism, the KMT began to oversee economic reforms in the late 1950s, setting Taiwan on the course of export-led growth under a capitalist model. Using archival materials from both the United States and Taiwan, I argue that the reforms resulted from U.S. influence on how the KMT understood the role of economic development in its grand strategy. U.S. arguments succeeded in creating political support at the highest levels of the KMT leadership for a reform-oriented faction in the economic bureaucracy. This finding shows how an aid donor can promote economic reforms even when the recipient is strategically important for the donor: although threats to enforce conditionality may not be credible, the donor can influence the recipient through persuasion.
We measure the development effects of both aggregated and sectorally disaggregated aid on selected educational and health indicators for 125 DAC-listed ODA recipient countries from 1995 to 2015. After controlling for country and time fixed effects, endogeneity, and biases of aid aggregation, our results provide evidence for the favorable long-run impact of education, health and other social-infrastructure aid flows on the process of human development.
Multilateral development banks (MDBs) are accorded immunities and privileges as agents of their member states as justified by functionalist arguments. They are also operationally hybrid: they are actors in their own right in addition to being functional agents. Navigating the functionalist imagery and relying on the argument that they are delegated purely economic pursuits (i.e. financing economic development), MDBs are able to eschew accountability to rights-holders that are affected by their decisions and operations. Although administrative law approaches have succeeded in increasing transparency, instilling self-regulatory frameworks and providing for independent review, the absence of external oversight of such review mechanisms and the broad immunities to suit enjoyed by MDBs have impeded true accountability to rights-holders. This article argues that, in so far as they engage in private sector financing operations, MDBs and their constituent arms share the form, function and relationships of an economic corporation to a large extent. Consequently, their immunities should be limited to render them bound—like ordinary corporations- by the domestic norms with respect to rule of law and human rights of the home and host countries in which they operate in order to make them accountable to rights-holders and to provide recourse for wrongdoings.
Although preceding studies on Japan's foreign aid tend to report that Japan's aid policy is receptive to US pressure, it remains unclear which direction the US wishes Japan to assist its aid programs and how bureaucratic politics of Japan reduces the magnitude of US influence. This paper pursues the first attempt to provide a theoretical framework for the direction of US influence on Japan's aid provision and to explore whether its impact varies across different types of aid. I utilize a new dataset on Japan's Official Development Assistance from 1971 to 2009 and employ both ordinary least squares and two-stage least squares regressions to handle the issues of reverse causality and joint decision-making. The combined results of quantitative and qualitative analyses suggest that the US tends to urge Japan to complement its aid efforts rather than to substitute them as substitution will allow Japan to increase its clout in strategically important recipients and the US attempts to minimize this risk by asking Japan to disburse aid in tandem. I also find that the allocation of Japanese grants is more receptive to US pressure than that of loans because the former is left to the discretion of the Ministry of Foreign Affairs that uses external pressure to win bureaucratic turf wars, whereas loans are determined through consultations among multiple agencies with constituencies that prioritize Japan's domestic interests. The findings are robust across different model specifications and different samples.
This paper seeks to bring new insights into the foreign aid allocation behaviour and patterns of two donors from the group of post-communist EU member countries, namely Poland and the Czech Republic. We use quantitative regression analysis to address Polish and Czech foreign aid objectives with a specific emphasis on geopolitical considerations and promotion of democracy. The results reveal a considerable level of similarity between Polish and Czech foreign aid allocation. Both donor countries use foreign aid to safeguard their own geopolitical self-interests—the Czech Republic and especially Poland prioritise post-Soviet countries in their aid allocations. They also prefer recipients in a relative geographic proximity. On the other hand, economic objectives are not significant drivers of Polish and Czech foreign aid. Given the recipients’ needs, the middle-income effects are evident in both countries’ aid allocations. Although support of democracy is an official objective of both donors, the level of democracy and freedom played a statistically significant role only in the allocation of overall Czech aid. A separated analysis on Polish and Czech democracy aid reveals even stronger biases of democracy aid towards former post-Soviet countries. Our research has also acknowledged the need for a more precise definition of democratic assistance.
The United Nations Security Council (UNSC) can respond to a civil conflict only if that conflict first enters the Council's agenda. Some conflicts reach the Council's agenda within days after they start, others after years (or even decades), and some never make it. So far, only a few studies have looked at the crucial UNSC agenda-setting stage, and none have examined agenda-setting speed. To fill this important gap, we develop and test a novel theoretical framework that combines insights from realist and constructivist theory with lessons from institutionalist theory and bargaining theory. Applying survival analysis to an original dataset, we show that the parochial interests of the permanent members (P-5) matter, but they do not determine the Council's agenda-setting speed. Rather, P-5 interests are constrained by normative considerations and concerns for the Council's organizational mission arising from the severity of a conflict (in terms of spillover effects and civilian casualties); by the interests of the widely ignored elected members (E-10); and by the degree of preference heterogeneity among both the P-5 and the E-10. Our findings contribute to a better understanding of how the United Nations (UN) works, and they have implications for the UN's legitimacy.
This article documents a positive and sizable correlation between the location of historical Christian missions and the allocation of present-day World Bank aid at the grid-cell level in Africa. The correlation is robust to an extensive set of geographical and historical control variables that predict settlement of missions. The study finds no correlation with aid effectiveness, as measured by project ratings and survey-based development indicators. Mission areas display a different political aid cycle than other areas, whereby new projects are less likely to arrive in years with new presidents. Hence, political connections between mission areas and central governments could be one likely explanation for the correlation between missions and aid.
The size of national delegations at the most critical intergovernmental climate change conferences—the annual gatherings of the Conference of the Parties (COPs) of the United Nations Framework Convention on Climate Change—vary greatly. The literature has emphasized the importance of national delegation size (NDS) for states’ formal and informal participation in climate change negotiations. To our knowledge, however, this is the first paper to comprehensively examine the determinants of NDS from 1995–2015. The findings highlight a country's resources and its interest in the mitigation of fossil fuel emissions as important determinants of its NDS. In contrast, the evidence for a connection between vulnerability to climate change and NDS is limited. Interest group politics appear more important than civil society or bureaucratic influence in determining NDS. In terms of policy implications, the distance between the country and the COP location is a robust deterrent of larger delegations, and there is a nonlinear relationship between NDS and financial capacity. Further, there are differences across Annex I and non-Annex I countries.
Many international development organizations (IDOs) have officially mandated anti-corruption criteria for aid selectivity. Substantial debate remains over whether corruption deters aid and whether anti-corruption rules are effectively implemented. We argue that the extent to which both corruption and anti-corruption mandates factor into IDO allocation depends on the composition of the donors. Using existing data on corruption alongside newly collected data on anti-corruption mandates, we demonstrate that organizations composed of corrupt donors are just as likely to adopt, but less likely to enforce, anti-corruption mandates. Organizations composed of less corrupt donors, by contrast, tend to divert aid away from corrupt states, with or without formal anti-corruption rules in place. The findings have implications for the debate over whether international efforts to institutionalize “good governance” standards are sincere or cheap talk, whether multilateral strategies are in fact less politicized than bilateral aid allocation strategies, and whether international organizations should be inclusive, open to membership by many or even all states, including those with dubious track records.
International organizations (IOs) often drive policy change in member countries. Given IOs' limited political leverage over a member country, previous research argues that IOs rely on a combination of hard pressures (i.e., conditionality) and soft pressures (i.e., socialization) to attain their political goals. Expanding this literature, we hypothesize that IOs can enhance their political leverage through loan conditions aimed at enhancing the political independence of key administrative units. Studying this mechanism in the context of the International Monetary Fund (IMF), we argue that through prescribing structural loan conditions on central banks (CBI conditionality), the IMF empowers central banks to gain more political leverage with the aim to limit a government's ability to (ab)use monetary policy for political gain. Divorcing monetary authorities from their respective government, the IMF intends to alter political dynamics towards achieving greater program compliance and enhance long-term macro-financial stability. Relying on a dataset including up to 124 countries between 1980 and 2012, we find that the IMF deploys CBI conditionality to countries with fewer checks and balances, a less independent central bank, and where the government relies more heavily on the monetization of public debt.
We test the hypothesis that aid recipient governments are better able to utilize aid flows for political favoritism during periods in which they are of geo-strategic value to major donors. We examine the effect of a country’s (non-permanent) membership on the United Nations Security Council (UNSC) on the subnational distribution of World Bank aid. Specifically, we analyze whether World Bank projects are targeted to subnational regions in which the head of state was born, or to regions dominated by the same ethnic group as that of the head of state. We find that all regions within a recipient country, on average, receive a greater number of aid projects during UNSC membership years. Moreover, a leader’s co-ethnic regions (but not birth regions) receive significantly more World Bank projects and loan commitments during UNSC membership years compared to other years. This effect is driven chiefly by interest-bearing loans from the International Bank for Reconstruction and Development (IBRD). Most importantly, we find stronger subnational political bias in aid allocation for aid recipients whose UNSC votes are fully aligned with those of the United States, indicating that exchanges of aid for favors occur in multilateral settings.
This article focuses on the effectiveness of Chinese developmental aid in Sub-Saharan Africa. The two main research questions are (1) whether Chinese development aid has a positive effect on economic growth in Sub-Saharan Africa; and (2) whether this impact is conditional on other factors. To examine these theoretical propositions, I analyze panel data covering 51 countries from the SSA over the 2000–2014 (15 years) period using FGLS estimations and 2SLS-IV estimations with two exogenous instrumental variables. The results show that Chinese Official Development Assistance (ODA) boosts economic growth. More specifically, Chinese ODA and grants work effectively in countries with anocratic regimes and in a scenario in which there is no US aid presence. Our findings shed light on the competition between China and the US for regional influence via developmental aid.
Does Chinese development assistance undermine recipient country compliance with DAC aid conditionality? I theorize that Chinese aid provides an outside option that weakens recipient countries’ incentives to comply with conditionality by decreasing their dependence on DAC donors and undermining the ability of DAC donors to credibly commit to the enforcement of aid agreements. I test the theoretical predictions using project-level data on government compliance with World Bank project agreements for a sample of 42 Sub-Saharan African countries from 2000-2014. The empirical analysis finds strong support for the hypothesis that Chinese development assistance decreases the likelihood of recipient country compliance with the conditions specified in World Bank project agreements. The results are robust to alternative measures of Chinese development assistance, potential sources of omitted variable bias, and an instrumental variable estimation strategy.
The conditionality requirements of the International Monetary Fund (IMF) have been a source of intense debate since the early 1980s. These conditions, which are attached to IMF lending programs, cover a variety of issues from fiscal and monetary reform to economic liberalization and institutional change. In this paper we empirically examined the effects of IMF programs and conditionality requirements on structural transformation through changes in the technology-and-skill intensity and overall economic complexity of exports. Our empirical methodology accounted for policy and conditionality heterogeneity across country and time and accounts for the endogeneity of IMF programs and conditions. The empirical results suggest that IMF programs and conditionality requirements along a spectrum of policy areas had no robust or significant effect on export structure, economic complexity or export diversification. Overall, we found no evidence of any positive effects of IMF programs or IMF conditionality requirements on the technology-and-skill intensity of exports.
Multilateral trust funds have become an increasingly prominent funding mechanism in international development. Yet marked differences exist in the extent to which donors support trust funds. In this study, we argue that differential support for trust funds originates in donor domestic politics. Specifically, it results from differences in national bureaucratic rulebooks that incentivise aid officials to support trust funds more or less. Because trust funds place a high premium on performance and results, aid officials from donor countries whose aid bureaucracies are set up to promote performance and results are more likely to support trust funds than their counterparts from aid bureaucracies that are less performance-oriented. We find robust support for differential use of trust funds in terms of incidence of usage, type of preferred fund and outsourcing behaviour, drawing on a data set of World Bank trust funds. Our project contributes to the understanding of international development cooperation by mapping donor political economies to the rise of trust fund usage. We also contribute to a better understanding of the global diffusion of performance-based evaluation.
International organizations (IOs) try to incorporate policy-specific best practices and country-specific knowledge to increase well-informed decision-making. However, the relative contribution of the two kinds of knowledge to organizational performance is insufficiently understood. The article addresses this gap by focusing on the role of staff in World Bank performance. It posits that country-specific knowledge, sectoral knowledge, and their combination positively contribute to World Bank projects. The argument is tested drawing on a novel database on the tenure, nationality, and educational background of World Bank Task Team Leaders. Three findings stand out. First, country-specific knowledge seems to matter on average, while sectoral knowledge does not. Second, there is some evidence that staff that combine both kinds of knowledge are empowered to make more positive contributions to performance. Third, the diversity and relevance of experience, not length of tenure, are associated with more success. The findings contribute to discussions on international bureaucracies by highlighting how differences between the knowledge of individual staff shape their decision-making and performance. IOs could better tap into the existing resources in their bureaucracies to enhance their performance by rotating staff less frequently between duty stations.
Did the International Monetary Fund (IMF) play a role in the United States and its Western allies efforts to contain the advance of communism during the Cold War? To answer this question, we construct a new database containing the number of conditions applied to over 500 IMF loans since 1970 and analyze how the distance from a borrowing country to its closet communist neighbor affected the IMF conditionality. We show that the Fund imposed fewer conditions on loans to countries geographically closer to the communist bloc. Results are stronger when neighboring communist countries were not part of the Warsaw Pact. This pattern persisted during the 1990s, when the Fund helped former communist countries in their transition to market economies. However, we find no strong evidence of such discretionary treatment by the IMF after 2001, when the containment of communism had ceased to be the West’s top priority.
Using bilateral aid data from 47 donors to 194 recipients, we find that while donors reward good relationship with more foreign aid, recipients sweeten their political relations with donors only after aid cuts. The negative impact of aid on political relations is more pronounced after the Cold War, in politically stable regions, and in countries where China and the U.S are both donors. We provide evidence that the competition for influence among donors with distinct political pursuits and the conflicts between donors and recipients in aid implementation are driving the results.
This article evaluates the international influence of Open Society Foundations (OSF) based on its goals and allocation of resources and takes into consideration the concerns raised by its critics. The study analyzes the objectives of this private philanthropic organization as well as its origins and the goals of its founder, George Soros. By assembling and using an original database, it also provides an overall analysis of all OSF grants assigned worldwide in the years 1999–2018 and quantitatively assesses their macro-level impact on democratic governance, freedom of expression, government accountability, and societies that promote justice and equity. Based on the available data, we find no evidence that OSF grants produce a positive impact at the macro-level on these goals nor that they effectively contribute to destabilize countries through protests and mass migrations as its critics claim. These results may have to do with lack of effectiveness or with motivations not matching the outcomes measured here. However, it is early to draw conclusions due to limited data.
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.
Do the normal rules of the game apply in international organizations during a global pandemic? We explore this question by comparing regular and COVID-19 World Bank loans. Analyzing lending from April 2, 2020 (the start of COVID-19 lending) to December 31, 2020, we find different results for the two types of World Bank loans. Looking at regular loans, countries that vote more in line with the U.S. on UN General Assembly resolutions are more likely to receive loans. For COVID-19 loans, geopolitics is not a significant factor. In contrast to ordinary business, the World Bank appears to have kept politics out of its pandemic response, instead more effectively focusing on provision of an important international public good.
This paper examines whether state-to-state political ties help firms obtain better terms when raising funds in global capital markets. Focusing on the Yankee bonds market, we find that issuances by firms from countries with close political ties with the US feature lower yield spreads, higher issuance amounts, and longer maturities. Such an association is more pronounced for firms located in low income and highly indebted countries as well as firms in government-related industries, first-time issuers, and relatively smaller firms. Our study provides evidence supporting the notion that country-level political relationship is an important factor when raising capital in international markets.
In this paper, we propose a game theoretic approach to deal with the problem of implementing the efficient allocation of aid and reform through policy conditionality. We show that optimality can only be attained by a conditional scheme that takes into account the characteristics of both donor and recipient. Moreover, the levels of aid and reform induced by such a mechanism are, under certain conditions, compatible with the goals of the recipient government. This result reconciles ownership with a specific form of conditionality.
Are international organizations autonomous actors in global politics? This paper investigates whether and how major powers influence the World Bank’s official development assistance policies. Despite the World Bank’s attempts to maintain independence from its member states, we argue that major powers are still influential. Testing this expectation with the data of official development assistance provisions between 1981 and 2017, we find that the World Bank provides a higher amount of official development assistance to the recipient countries that receive a higher amount of such assistance from the major powers such as the United States, the United Kingdom, France, Germany and Japan. In addition, the World Bank is prone to provide a higher amount of official development assistance to the recipients that have a similar preference to the major powers. This study sheds light on the relations between major powers and international organizations.
How and why do the policy areas covered in World Bank loan conditions change over time and across borrowers? We hypothesize that shifts in the Bank’s economic research and policy priorities influence Bank loan conditions, even after controlling for country characteristics and international political aspects. To test this claim we apply keyword-assisted topic models to the analysis of over 13,000 World Bank policy loan conditions and close to 35,000 World Bank research papers published between 1985 and 2014. Contrary to the criticism levelled against the Bank that changes in research and policy priorities are mostly rhetorical and have little substantive effect on Bank lending, we find that internal research and policy priority shifts explain the conditions in a Bank loan at least as well as more traditional donor or borrower-specific measures central to IPE models of Bank lending.
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.
International organizations (IOs) increasingly pool resources and expertise. Under what conditions do they pool rather than compete when their activities overlap? Drawing on elite interviews, I argue that even though many cooperation decisions are made by staff possessing high degrees of autonomy from member state principals, IOs are more likely to pool resources when their leading stakeholders are geopolitically aligned. Regardless of whether member states directly oversee the negotiation of these arrangements, staff design policies that are amenable to major stakeholders. I test this argument with regression analysis of an original data set that documents patterns of co-financing and information sharing among IOs in the development issue area. I further supplement these tests with an elite survey experiment deployed via LinkedIn to bureaucrats from various development IOs. Across the board, I find evidence consistent with my theory.
The Foreign Corrupt Practices Act (FCPA) is frequently used by the US law enforcement authorities to prosecute both US and foreign firms for bribery in foreign host countries. Evidence increasingly shows that anti-bribery enforcement is associated with a reduction in foreign investment inflows to host countries associated with enforcement actions. The determinants of enforcement actions remain understudied, however. I argue that enforcement actions are often political in nature, operating as de-facto sanctions against targeted countries. FCPA prosecutions can thus be viewed as a tool of economic statecraft, designed to reduce foreign direct investment (FDI) inflows to targeted states and enforce US foreign policy objectives. Using data on FCPA enforcement actions along with data on UN voting patterns, alliances, and US foreign aid, I find that FCPA enforcement actions are more likely to target firms that bribe in host countries with foreign policy preferences that diverge from the United States. This paper is among the first to empirically study the determinants of anti-bribery enforcement and to explicitly consider the political nature of FCPA prosecutions. These findings have broad implication for political economy research on foreign investment, economic statecraft, and corruption.
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.
The allocation of bureaucrats across tasks constitutes a pivotal instrument for achieving an organization’s objectives. In this paper, I measure the performance of World Bank bureaucrats by combining the universe of task assignment with an evaluation of task outcome and a hand-collected dataset of bureaucrat CVs. I introduce two novel stylized facts. First, bureaucrat performance correlates with task features and individual characteristics. Second, there exists a negative assortative matching between high-performing bureaucrats and low-performing countries. In the aftermath of natural disasters, which may weaken countries’ performance even further, I observe that low-performing countries receive an additional allocation of high-performing bureaucrats. I discuss various interpretations of these findings.
Despite the rapid growth of non–Development Assistance Committee (DAC) emerging donors, these non‐traditional donors are historically left out of the discussion on aid effectiveness. In this paper, we provide the first full evaluation of aid agency best practices across multiple agency categories. We rank and compare DAC donors, emerging non‐DAC donors, and multilateral and UN agencies in the following five best practice categories: transparency, overhead costs, aid specialization, selective allocation, and effective delivery channels. Contrary to public impressions that emerging donors engage in worse practices, we find that non‐DAC agencies rank similarly to DAC donors: Both groups are equally poor performers. Emerging donors engage in less aid fragmentation across countries and use fewer ineffective delivery channels. Traditional DAC donors, however, provide more transparent reporting. Overall, we find that multilateral agencies and UN donors outperform both DAC and non‐DAC bilateral agencies. Collectively, our results suggest that most aid donors do not meet their own standards for best practices, and this finding is not unique to emerging donors. We highlight how our results reflect the broader political economy of aid allocation.
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
Formulierung und Test eines einfachen Modells für das Verhalten der Weltbank. -Um das Verhalten der Weltbank zu analysieren, wird ein einfacher theoretischer Ansatz entwickelt, indem angenommen wird, daß die Weltbank wie eine einzige Person ihren Nutzen maximiert. Die Argumente der Nutzenfunktion sind die Summe der Kredite an die Empfängerländer, die Einkommen dieser Länder und der gesamte erwartete Zahlungsausfall beim Schuldendienst. Die Beschränkung der Funktion liegt im Gesamtbudget der Bank. Auf dieser Grundlage werden mehrere Hypothesen bezüglich der Kreditpolitik der Weltbank abgeleitet und getestet. Es zeigt sich, daß das Einkommen und Ausfallrisiko zu 37–40 vH die Varianz der Weltbankdarlehen, die 1981 und 1982 gewährt worden sind, erklären können.
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.
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.
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.
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.
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.
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)?
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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).
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.