شروط وام ها و سرمایه گذاری خصوصی بانک جهانی در کشورهای دریافت کننده

World Bank conditional loans might affect private investment in recipient countries not only through the funds they provide, but also via the policy conditions they include and the transfer of knowledge they imply. This work investigates the impact of these channels on private investment, considering also the particular effect of the formal commitment to reform, which necessarily comes along with conditionality. Taking into account the selection problem posed by participation in World Bank programs, the results indicate that backed commitments are associated with lower investment ratios in the short-run, and none of the other potential channels of influence seem to counterbalance this negative impact.

World Bank and IMF conditional loans are designed to support policy and institutional reforms in developing countries. Therefore, the governments that sign this kind of loans have to commit themselves to implementing certain policy menus of reforms before they will actually receive the funds agreed to. The question of whether in the past two decades the conditional aid provided by these two institutions has fostered sustainable reforms, and promoted economic development is still controversial. In fact, policy-based lending presents a mixed record (see World Bank, 1998), and its real impact is difficult to assess for two main reasons. First, it is difficult to separate the economic effects of the loans from the effects of other observable and unobservable circumstances that brought the country to ask assistance. In addition, conditional loans may affect the economic performance of recipient countries through several channels, such as the amount of funds they provide, the policy conditions they include, and the transfer of knowledge and advice that they imply. This paper aims at investigating the effect of World Bank Structural (and Sector) Adjustment Loans on private investment, by distinguishing the channels aforementioned and by controlling for the fact that the countries receiving loans are a non-random sample of all possible countries. By doing so, this work combines the features of two recent strands of the literature on the subject: one, which emphasizes the importance of disentangling the impact of different channels through which IMF and World Bank programs may influence macroeconomic outcomes (see Bookmann and Dreher, 2003 and Dreher, 2004), and another that advocates the use of appropriate econometric techniques in order to account for the potential selection bias implicit in participation in structural programs (see Przeworski and Vreeland, 2000 and Vreeland, 2003). Differently from most previous studies, which focus their analysis on the long-term impacts, this work adopts a short-run perspective. This time horizon is considered given the crucial role that the investment response can play not only in the long term for the economic growth, but also in the short term for the survival of the reforms themselves. Considering only the long-term investment response, by appealing to the difficult economic conditions characterizing new recipient countries, implies neglecting an important aspect: a short-run investment response is highly desirable, as it may make the adjustment effort socially more acceptable and increase the probability that the reforms will be maintained. Indeed, for a Structural Adjustment Program (SAP) to survive, it is extremely important that good effects are quickly visible, as negative effects tend to prevail: packages usually include harsh economic reforms involving budget cuts, privatization, and labor “flexibility,” which are likely to increase unemployment in the short run. Additionally, given the intense cooperation between the two institutions, frequently Bank loans have been coordinated with stabilization programs administered by the Fund. Hence, if a positive investment response materializes in the short-run, this is likely to smooth the progress also of the Fund’s targets. Considering a short time horizon allows also the assessment of which of the mentioned channels exerts a prompt influence, and therefore might be considered to be key determinants of how long the program will endure. Focus is particularly on the potential short-term role of the formal commitment to reform, which necessarily comes along with conditionality and may represent a signal that the governments send to private investors in order to boost their investment response. To shed light on these issues, a sample of both recipient and non-recipient countries is employed, and the impact of SAPs on investment is assessed by using a methodology that accounts for the selection problem posed by participation in World Bank programs, by allowing the investment and the selection processes to be potentially correlated. In particular, the first process is modeled as an empirical investment equation for developing countries, while the second is modeled following the recent literature on the IMF and World Bank loans determinants (see, among others, Abouharb and Cingranelli, 2005, Knight and Santaella, 1997 and Vreeland, 2003). The main finding of this paper is that backed commitments to reform appear associated with lower investment ratios, and none of the other potential channels of influence seem to counterbalance this negative impact. The remainder of the paper is organized as follows: the next section reviews the literature on the impact of adjustment programs on economic outcomes. After a brief description of the traditional approaches used to analyze the Bank programs effects, Section 2 focuses on the two strands of the literature that guide the empirical analysis. Section 3 describes the empirical question and the methodology employed. Furthermore, it illustrates the theoretical assumptions underlying the adoption of the estimated equations, with the definition and justification of each variable. Section 4 presents the data, describes the results obtained, and reports the robustness checks performed. Section 5 is a conclusion.

The main finding of the present work is that formal commitments to reform prompted by World Bank structural loans seem to be associated with lower investment ratios in the short-run in recipient countries. This result is robust across different specifications, and alternative approaches used to estimate a treatment effect model, which is adopted to account for the potential selection bias implicit in the participation in structural programs. Such a harmful effect is likely to add to other short-run negative effects, which usually characterize an adjustment period. Therefore, the probability of program survival is bound to decrease. It might be argued, however, that a temporary slowdown in private investment could be rational during an adjustment period, when a high marginal return exists for postponing investment until the uncertainty is resolved. Furthermore, when the beginning of a structural program is announced, a positive investment response might not materialize because the reforms envisaged by the program are credible but centered on austerity. Therefore, the expectation of a period of austerity leads investors to hold back on their investment decisions, and wait for better demand conditions. In both the cases, once the economy is stabilized, investors will respond positively to SAPs. In other words, a possible interpretation of the negative impact detected here is that it takes some time before all the channels of World Bank influence (policy conditions, funds and transfer of know how) exert their influence, and possibly counterbalance the short-run negative effect. In fact, when a longer-run perspective is adopted, by considering all variables as five-year averages, none of the mentioned channels appear to be relevant, and affect the aggregate investment positively. By contrast, there is some evidence of a negative impact of World Bank funds. These results, yet, are not tabulated as they must be interpreted with caution for the limited size of the estimation sample, and further investigation is ongoing on the topic. Indeed, as the non-recipient countries define the counterfactual on the basis of which the analysis is carried out, a larger cross-country data set might either confirm or refute the mentioned findings. Besides, the present findings (both in the short and long run) refer to the average impact of World Bank SAPs, therefore they may hide a certain degree of unevenness across countries, and only a case-study approach would allow the drawing of more reliable conclusions about the single country experience. Bearing in mind these caveats, the evidence produced by this paper appears to support the widespread criticism of conditional lending, according to which conditionality sounds at odds with the governments’ ownership of the programs. In other words, policy conditions might be perceived of as a signal that government and donor preferences diverge, and therefore they might compromise the credibility of policy reforms, and impair the supply responses. In particular, according to Collier et al. (1997), a detailed specification of policy reforms and a short period for which contracts apply may exacerbate the problem of limited ownership. In the authors’ view, the rationale of this design is to “price” reforms individually, but the private sector cannot be confident about “a policy environment, which has been purchased by donors.” If the domestic policy makers have initiated some processes of reform in response to “a carrot or a stick,” the private agents may expect a return to the status quo once the carrot or the stick incentive is removed. The recent World Bank move toward a programmatic approach could represent an important step toward overcoming the shortcomings of such a short-leash conditionality. The Poverty Reduction Strategy Papers (PRSPs) introduced by the IMF and the World Bank in 1999 are prepared by governments with the contributions of domestic stakeholders and these international financial institutions. They illustrate the policies and programs that a government intends to carry out over several years to foster sustainable and equitable growth. They also specify the amount and the sources of financing that the country intends to employ. Their aim is to increase public participation in order to strengthen country ownership and commitment to reform. With the same intent adjustment lending has recently been replaced by development policy lending. This switch is considered as a mirror of a new policy course: the Bank appears determined to support sound reforms that are genuinely owned by the governments and their citizens. Future research on the effectiveness of this new approach is called for, in particular to assess whether the participatory process facilitates private investment, therefore enhancing the prospects for future development.