Power, ideas, and World Bank conditionality

Abstract

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 keywordassisted 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.

The Political Economy of Chinese Debt and International Monetary Fund Conditionality

“…Second, our work relates to recent political economy scholarship examining the importance of Chinese loans for recipient governments' relations with international financial institutions and its international political maneuvering 4 Our work also expands on the recent findings of McDowell and Steinberg (2017) and Gueorguiev, McDowell, and Steinberg (2020) that analyze the role of the internationalization of the Renminbi and the rise of China as an international financier of the developing world. ( Corkin 2016 ;Hernandez 2017 ;Zeitz 2021 ;Cormier and Manger 2022 ;Watkins 2022 ). Complementing the recent findings of Sundquist (2021) , we show that countries substituting IMF funding for Chinese loans are eventually returning to the Fund, hinting at the temporary nature of this substitution effect.…”

“…Complementing the recent findings of Sundquist (2021) , we show that countries substituting IMF funding for Chinese loans are eventually returning to the Fund, hinting at the temporary nature of this substitution effect. Whereas Hernandez (2017) and Cormier and Manger (2022) find that countries with access to Chinese finance face less stringent conditionality in World Bank loans, our findings support the opposite view for IMF loans:…”

“…Weak tax and government revenue systems, a lack of domestic savings in combination with undercapitalized domestic financial markets often prevent governments from mobilizing funds without substantial fiscal reform ( DiGiuseppe and Shea 2016 ; Kern, Reinsberg, and Rau-Göhring 2019 ). 10 As international investors, more ternational lending business ( Kaplan 2021 ;Cormier and Manger 2022 ;Sundquist 2021 ). Take, for instance, the case of Ecuador.…”

Partisan External Borrowing in Middle-Income Countries

“…These conditions expose labor and the poor to negative adjustments more than other groups in the borrower. Western lenders also include policy conditions that, though not as dogmatically applied as in the 1990s, continue to expose labor and the poor to the brunt of adjustments that stem from privatization, fiscal consolidation, broad expansion of the tax base, expenditure cuts, and debt reduction conditions (Babb 2013; Cormier and Manger 2021; Kentikelenis, Stubbs, and King 2016). Broadly similar conditionalities are why official creditors often co-finance loans.…”

Chinese or western finance? Transparency, official credit flows, and the international political economy of development

“…But recent work suggests that such implications for international relations, where credit is used to create a Chinese "sphere of influence" (Ibrahim, 2020), are not systematically evident. China appears "no more self-interested than their Western counterparts" (Dreher et al, 2018: 2), pushing back on concerns that China's "rogue aid" undermines development (Naim, 2007): Chinese rates do not undercut Western rates (Morris et al, 2020); Chinese credit to African countries correlates-to rather than crowds-out Western credit (Humphrey & Michaelowa, 2019) and the World Bank emulates Chinese projects in these contexts (Zeitz, 2021a); while China does not include fiscal policy conditions, other conditionalities have constraining effects on borrowers that are similar to the West (Kaplan, 2021: Chapter 3); the content of World Bank loan conditions does not systematically change when China is also lending to the country (Cormier & Manger, 2021), even if the number of conditions may (Hernandez, 2017). Together, empirical studies of Chinese credit allocation do not see Chinese interests as wholly different than Western interests, arriving "at more conditional conclusions" (Dreher et al, 2018: 183).…”