Restructuring economies in distress: policy reform and the World Bank

Abstract

This book assesses the experience of countries with adjustment programs and the effectiveness of adjustment lending from the World Bank in supporting these programs. It takes an inventory of the decade of experience with adjustment lending in fifty-one countries from 1980 to 1987. The studies presented here have comprehensively evaluated such aspects of adjustment lending as its design, policy, components, conditionality, social implications, macroeconomic interactions, and country performances for a sample of nine countries from all regions of the developing world. Three positive features of adjustment lending emerge from the inventory presented here. First, among countries requiring adjustments, those that have carried out major adjustments have performed better on average in terms of their aggregate economic activity than those that have not. Second, the overall rate of implementation of loan conditionalities seems to have been quite satisfactory. Third, adjustment lending has become a necessary and valuable instrument for supporting the economic development of borrowing members. Notwithstanding the generally positive review of adjustment lending, the wide variation in its effectiveness raises many questions about when and how to use it and how to improve it. Thus, three central issues emerge from the varied analysis in this book: the ownership of the program, the adequacy of macroeconomic stability, and the size of external funding.

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