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The catalyzing role of policy-based lending by the IMF and the World Bank: fact or fiction?

Author

Listed:
  • Graham Bird

    (Surrey Centre for International Economic Studies, University of Surrey, Guildford, UK)

  • Dane Rowlands

    (Norman Paterson School of International Affairs, Carleton University, Ottawa, Canada)

Abstract

Does the involvement of the IMF and World Bank in developing countries and countries in transition help them to attract capital from other sources? Do the multilateral institutions exert a catalytic effect? While there is a strong body of opinion that claims that they do, the catalytic effect has been under-researched. This paper briefly reports the results from a research project financed by the UK Department for International Development. It examines the theory behind catalysis and also investigates the empirical evidence relating to it, drawing on qualitative research, regression analysis based on a large sample of developing countries, and systematic case studies. The analysis shows how the catalytic effect is nuanced and complex but that overall it is weak. The catalyzing role of the IMF and the World Bank remains potentially important, however, and the paper assesses ways in which it may be strengthened. Reforms are discussed in the context of the debate over a new international financial architecture. Copyright © 2000 John Wiley & Sons, Ltd.

Suggested Citation

  • Graham Bird & Dane Rowlands, 2000. "The catalyzing role of policy-based lending by the IMF and the World Bank: fact or fiction?," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(7), pages 951-973.
    • Handle: RePEc:wly:jintdv:v:12:y:2000:i:7:p:951-973
    DOI: 10.1002/1099-1328(200010)12:7<951::AID-JID717>3.0.CO;2-8
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    References listed on IDEAS

    as
    1. Graham Bird, 1988. "An Analysis of Drawings on the International Monetary Fund by Developing Countries," Palgrave Macmillan Books, in: Managing Global Money, chapter 6, pages 104-112, Palgrave Macmillan.
    2. Graham Bird, 2004. "External Financing and Balance of Payments Adjustment in Developing Countries: Getting a Better Policy Mix," Palgrave Macmillan Books, in: International Finance and the Developing Economies, chapter 2, pages 14-33, Palgrave Macmillan.
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    5. Graham Bird & Dane Rowlands, 2004. "The Catalytic Effect of Lending by the International Financial Institutions," Palgrave Macmillan Books, in: International Finance and the Developing Economies, chapter 12, pages 204-226, Palgrave Macmillan.
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    16. Graham Bird, 2004. "How Important is Sound Domestic Macroeconomics in Attracting Capital Inflows to Developing Countries?," Palgrave Macmillan Books, in: International Finance and the Developing Economies, chapter 9, pages 141-168, Palgrave Macmillan.
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    Cited by:

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    2. John Toye, 2011. "The International Monetary Fund and the World Bank," Chapters, in: Jonathan Michie (ed.), The Handbook of Globalisation, Second Edition, chapter 22, Edward Elgar Publishing.
    3. Stubbs, Thomas H. & Kentikelenis, Alexander E. & King, Lawrence P., 2016. "Catalyzing Aid? The IMF and Donor Behavior in Aid Allocation," World Development, Elsevier, vol. 78(C), pages 511-528.
    4. Butkiewicz, James L. & Yanikkaya, Halit, 2005. "The Effects of IMF and World Bank Lending on Long-Run Economic Growth: An Empirical Analysis," World Development, Elsevier, vol. 33(3), pages 371-391, March.
    5. Harrigan, Jane & Wang, Chengang & El-Said, Hamed, 2006. "The economic and political determinants of IMF and world bank lending in the Middle East and North Africa," World Development, Elsevier, vol. 34(2), pages 247-270, February.
    6. Hicks, Robert L. & Parks, Bradley C. & Tierney, Michael J., 2005. "Explaining the Allocation of Bilateral and Multilateral Environmental Aid to Developing Countries," 2005 Annual meeting, July 24-27, Providence, RI 19346, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Chungshik Moon & Byungwon Woo, 2022. "Curse of friendship: IMF programme, friendship with the United States and foreign direct investment," The World Economy, Wiley Blackwell, vol. 45(7), pages 2188-2221, July.
    8. Marijana Andrijic & Tajana Barbic, 2018. "Trick or Treat? The Effect of IMF Programmes on Mobilising FDI in CESEE Countries," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 68(3), pages 245-267, July.
    9. Graham Bird & Dane Rowlands, 2007. "The IMF and the mobilisation of foreign aid," Journal of Development Studies, Taylor & Francis Journals, vol. 43(5), pages 856-870.
    10. Gatti, Matteo & Gorea, Denis & Presbitero, Andrea, 2023. "The effect of EIB operations on private sector lending outside the European Union," EIB Working Papers 2023/03, European Investment Bank (EIB).

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