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Surrender your market! Do the G5 countries use World Bank Trade Conditionality to promote Trade?

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  • Breßlein, Martin
  • Schmaljohann, Maya

Abstract

In this paper we investigate whether the design of World Bank conditionality, namely the extent of trade liberalization conditions, is influenced by the commercial motives of the Bank’s five major shareholders. Using a newly available dataset on World Bank conditionality we analyze the conditionality design of more than 870 projects over the 1981 – 2010 period. Our results suggest that countries of commercial interest for Germany have, on average, more trade liberalization conditions attached to their loans, indicating a trade promotion strategy. For the US, on the other hand, our results show that trading partners receive significantly fewer trade conditions. This suggests protection of the own bilateral trading relations from competition that would arise in the case of more open markets.

Suggested Citation

  • Breßlein, Martin & Schmaljohann, Maya, 2013. "Surrender your market! Do the G5 countries use World Bank Trade Conditionality to promote Trade?," Working Papers 0550, University of Heidelberg, Department of Economics.
    • Handle: RePEc:awi:wpaper:0550
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    2. Hernandez, Diego, 2015. "Are “New” Donors Challenging World Bank Conditionality?," Working Papers 0601, University of Heidelberg, Department of Economics.
    3. Hernandez, Diego, 2013. "Does Inclusion Guarantee Institutional Autonomy? The Case of the Inter-American Development Bank," Working Papers 0541, University of Heidelberg, Department of Economics.
    4. Hernandez, Diego, 2017. "Are “New” Donors Challenging World Bank Conditionality?," World Development, Elsevier, vol. 96(C), pages 529-549.

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