How successful is World Bank lending for structural adjustment?
To measure the effectiveness of the World Bank's structural adjustment programs, the author examines the data on actual economic performance for 75 countries for the period 1976-86. He finds a clear association between participation in a World Bank adjustment lending program and cross-country differences in economic performance and policy. Countries that participated in adjustment lending programs tended to have the following characteristics, compared with countries that did not participate in such programs: (a) more rapid economic growth; (b) more rapid inflation; (c) a less negative current account balance as a percentage of GNP; (d) deeper financial sectors; (e) a lower ratio of current government spending to GNP; and (f) depreciation of the real exchange rate. The first three indicators reflect differing performance; the second three, different policy mixes. In other words, the countries have not benefited merely by increased financing at the margin but have also undertaken significantly different economic policies.
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