Comments on Effectiveness of Bank Support for Policy Reform

I should say immediately that OED’s 2003 Annual Review of Development Effectiveness (ARDE) (World Bank 2004) is a welcome breath of fresh air and further confirmation that important changes are occurring in official thinking in and around the Bank. Without going over the same ground covered by earlier speakers, I would particularly single out the following points: • The report recognizes that the main determinants of policy choices

in borrowing countries are domestic. National politics tends to dominate, so the international financial institutions (IFIs) and other donors can expect to have only limited direct influence over policy decisions. This recognition is perhaps best summarized by the report’s remark (pp. 39-40) that “Although adjustment lending has played an important role in many countries that have undertaken reforms . . . its effectiveness is mainly attributable to underlying circumstances in the countries that favored reform.” Note also its observation that even in pro-reform countries the Bank is likely to come undone if it seeks to insist on its own priorities.