Magdalena Fischer and Fiia Duldin

1. WhatExplains the SuccessorFailure of StructuralAdjustmentProgrammes? David Dollar and Jakob Svensson Magdalena Fischer and FiiaDuldin

2. Structural adjustment programs • Loan from the World Bank • Data from the World Bank’s Operation Evaluation Department (OED) • advantages of data • disadvantages of data • 182 loans are used

3. Hypothesis 1 • Depends on political-economy factors • Variables • Ethnic fractionalization • Democratic elections • Length of tenure • Strong influence

4. Hypothesis 2 • Influence from factors under control of donor community • No evidence

5. Three forms of failed adjustment lending • Loans disbruse fully. Poor choices. • more administrative recources to failed programs • Indiscriminately choices

6. Reform Outcome • Measured by Zero-One Dummy

7. (yearlyinflation rate threeyears (t3) after closingyearofreformprogram)-(yearlyinflation rate startingyear (t0) oftheprogram) (budgetbalance/GDP threeyears (t3) after closingyearofreformprogram)-(budgetbalance/GDP startingyear (t0) oftheprogram)

8. 182 loans • Can the success or failure of adjustment programs be explained by political economy variables? • Do variables under control of the donor community and in particular the World Bank have any effect on the success rate of adjustment programs? • 117 success (64 %) • 65 failures (36 %)

10. Donorbehaviour • World Bank behaves as large donor community • Low-income countries • Preparation and supervision

11. Conclusions • democratically elected governments are indicators for success • Example of failure: Zambia • Loans from Wold Bank in 1980, 212 million dollars • Loans disbursed fully • mostly predictable • not democraticallyelected • highly ethnically fragmented

12. Conclusions • Successfully prediction from a small number of political economy variables • No influence of World Bank variables • Donors • more informed analysis of benefits, costs and risks • Not expect to have a large impact

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