Debt‐Relief Effectiveness and Institution‐Building

This article provides new evidence on the effects of recent debt‐relief programmes on different macroeconomic indicators in developing countries, focusing on the Heavily Indebted Poor Countries (HIPCs). The relationship between debt relief and institutional change is also investigated to assess whether donors are moving towards ex‐post governance conditionality. Results show that debt relief is only weakly associated with subsequent improvements in economic performance but is correlated with increasing domestic debt which undermines the positive achievements in reducing external debt service. There is also evidence that donors are moving towards a more sensible allocation of debt forgiveness, rewarding countries which have better policies and institutions.     

What Did US$18 bn Achieve? The 2005 Debt Relief to Nigeria

Since 2003 Nigeria's economic growth has been consistently above 6% and has been driven by non‐oil sectors. This article attempts to assess the contribution of the 2005 debt‐relief agreement to this higher growth. The agreement eliminated Nigeria's US$30 billion debt to Paris Club creditors who cancelled US$18 bn, while Nigeria paid back US$12 bn. The article traces the three possible impact channels of debt relief, namely, the flow (reduced debt service), the stock (removal of debt overhang) and the conditionality channel, and comes to the conclusion that the debt‐relief agreement played a key role in the country's improved economic performance, in particular through successful conditionality.     

Will ‘Emerging Donors’ Change the Face of International Co‐operation?

Responding to the recent upsurge of interest in ‘emerging donors’, this article argues that the DAC share of aid is likely to decline only slowly from what is a historically high level, and at least some non‐DAC donors are likely to see DAC approaches and norms as relevant. Nevertheless, low‐income countries seem likely to have a wider range of financing options. Three key risks are that: they prejudice their debt situation by borrowing on inappropriate terms; they use low‐conditionality aid to postpone necessary adjustment; and they waste resources on unproductive investments. DAC members should develop constructive dialogue with other bilateral donors based on recognition that sustainable development and poverty reduction should be the core purpose of aid.     

Aid Harmonisation and Alignment: Bridging the Gaps between Reality and the Paris Reform Agenda

The Paris agenda on aid effectivess emphasises support for recipient‐owned development strategies, increased use of national systems and more co‐ordinated and predictable donor actions. Monitorable targets for such behaviour have been agreed, but the connections with expected development benefits are as yet unproven. Alternative views of the rationale for aid agencies, transaction costs and conditionality, in which there is rarely complete preference alignment and trust between donors and recipients, introduce further complications. Four additional policy measures are identified which cannot be managed easily within the Paris agenda: better international balancing of aid allocations; new instruments with longer commitment horizons; liquidity arrangements to enable ‘scaling up’ across several countries; and independent aid rating institutions linked to market‐like sanctions.     

Picking Winners? Evidence on NATO’s Enlargement Strategy

The effectiveness of NATO conditionality for institutional reforms is highly controversial. Some papers argue that any effect this conditionality might have had may be due to endogeneity effects, i.e. NATO may have picked the winners. We argue that this is not the case. First, NATO-Mazedonia relations provide a case in point. Macedonia was granted entry into the Membership Action Plan (MAP) in 1999 due to country’s strategic importance. Only after the Ohrid agreement, effective conditionality set in and marked a switch in NATO strategy from security only towards institution building. Second, this is supported by econometric evidence based on panel data. An event study reveals that entry into NATO’s accession process was mainly driven by neighbourhood and good relations with the West. We conclude that empirical evidence clearly supports a stronger role of NATO’s political agenda, i.e., low entry barriers but strict accession conditionality.     

Analysing local perceptions of post‐conflict and post‐floods livelihood interventions in Swat,Pakistan

The Swat valley in Pakistan’s Khyber Pakhtunkhwa (KP) province was affected by a protracted conflict and super flood between 2007 and 2010. This article explores local perceptions of the Swat response, which presented complex challenges for rehabilitation and livelihood recovery of affected communities. This study examines local perceptions of how non‐governmental organizations (NGOs) and government response addressed livelihood revival needs, considers questions relating to the nature and dynamics of the conflict and floods and reflects on the issues and lessons of post‐disaster relief and development. The qualitative case study was conducted between September 2010 and February 2011. Primary data were collected in 11 villages and localities from beneficiaries and non‐beneficiaries, government representatives, community leaders and programme officials involved in livelihood interventions. This article identifies the shortcomings associated with the targeted response, as well as the types of response offered in the form of beneficiary selection and elite co‐opting of aid. The response was affected by a lack of relief, recovery and development programme co‐ordination, weak institutional support and non‐prioritization of local needs. The article recommends that for effective development policy and practice, local ownership of response and recovery programmes needs to be promoted.     

INTENSIFYING GLOBAL DEPENDENCY: Foreign Debt, Structural Adjustment, and Third World Underdevelopment

Dependency-oriented arguments have not focused sufficient attention on the growing international debt crisis. This omission is unfortunate because foreign debt has introduced several important dynamics into the world capitalist system. Perhaps most important, the International Monetary Fund (IMF) has emerged as one of the most powerful transnational financial institutions, as it makes loans to and evaluates credit worthiness of Third World states. To be acceptable credit risks, underdeveloped states often must implement a number of IMF "structural adjustment" or austerity measures. Our cross-national analysis-which includes an examination of important outliers-indicates that IMF-imposed conditionality is the primary impediment to economic expansion in the Third World. Growing service payments on the external debt also inhibit economic growth, but less so. Moreover, although structural adjustment does not yet significantly impact physical quality of life, foreign investment and level of international reserves do exhibit a negative effect on this indicator. Dependency arguments should be revised and broadened given the profound impact of the global debt crisis.     

External Financing of Social Protection: Opportunities and Risks

Social transfers have reached the policy agenda of low‐income countries in Africa, where affordability is a key concern and aid dependence is high. In terms of magnitude, aid could make a substantial difference in relaxing the affordability constraint. This article addresses issues that arise as external financing is contemplated. Cash on delivery (COD) aid is discussed as an alternative aid contract when the political ownership is strong. The potential for external financing where political ownership is weak is also discussed, and the limitations of aid under such circumstances are recognised.     

Financing for Development: The Gap between Words and Deeds since Monterrey

The Monterrey Consensus agreed at the UN summit on Financing for Development in 2002 promised a breakthrough in terms of donor generosity, aid effectiveness and new means of financing. However, the development orientation of world leaders proved to be short‐lived. This is even though our evaluation reveals progress since Monterrey in some areas, notably debt relief and private (FDI) flows. Calls for substantially scaling‐up regular aid had less effect than envisaged, and financial innovations have contributed only marginally to overall development financing so far. Nor is there much progress from the perspective of critics focusing on the quality of aid. In particular, the targeting of aid according to need and merit leaves much to be desired. The gap between words and deeds continues to be wide with regard to aid proliferation and donor co‐ordination as well.     

Leader,Protester, Enabler,Spoiler: Aid Strategies and Donor Politics in Institutional Assistance

Aid co‐ordination has come to be seen as a miracle cure for the ills of donor proliferation. However, in weak states where aid conditionality may be a catalyst for institutional change, the ideal of aid co‐ordination is conceptually suspect, and in some instances politically counterproductive. Co‐ordination is one of the two solutions to the collective‐action problem that the public good of effective institutional conditionality generates; donor leadership is the other. The desirability of each solution depends on every donor's commitment and presence, which together generate a four‐fold typology: leader, protester, enabler, and spoiler. As long as there is at least one enabler or spoiler donor present, aid co‐ordination will be less effective than donor leadership.     

International Labour Migrants' Return to Meiji-era Yamaguchi and Hiroshima: Economic and Social Effects

International labour migration from Meiji era (1868–1912) Japan was intensely concentrated: over 60 per cent of the 29,000 participants in the government-managed Hawai'i emigration programme ( kan'yaku imin , 1885–1894) came from seven coastal counties around the Hiroshima-Yamaguchi prefectural border in southwest Japan. Almost half of the emigrants became long-term settlers instead of returning to their hometowns, but this paper examines what happened to returning emigrants and to their home communities. Since the migration was primarily economic in nature, the effect of migrant earnings was carefully monitored and is frequently cited by scholars. Surveys showed high rates of debt repayment and savings, and improved living conditions, but investment and entrepreneurship were limited. High-emigration regions rarely became economic centers of any importance. Less carefully studied are non-economic effects, partially because the labour programme was structured to minimize contact with Hawaiian or Caucasian culture, and thus returnees had little cultural experience to transfer to their hometowns. Local officials in Yamaguchi seemed proud of the lack of social change. Even long-term sojourners, who returned due to family needs after a decade or more overseas, exhibited no readjustment difficulties. Returnees, particularly in Yamaguchi, sometimes moved on to Japanese colonial territories, creating multilateral and complex relationships with overseas communities. This sojourning migration, like contemporary analogs, was a powerful form of poverty relief in the midst of dislocating globalization, but did not produce a rise in entrepreneurship or a Westernization of local culture. Because this sojourning migration was structurally similar to our modern-day patterns, it provides evidence of the longevity of those patterns and the possible long-term effects, and raises questions about our expectations for migration policy.     

Implementing Evidence‐Based Parenting Programmes in a Small Sample of English Urban Local Authorities: Eligibility,Fidelity and Intensity

This article focuses on the implementation of evidence‐based parenting programmes (EBPPs) in a small sample of urban local authorities in England. The first part discusses the development of government policy, guidance and implementation issues. The second part presents findings from an exploratory study, which focused on the implementation of EBPPs in terms of programme eligibility, fidelity and intensity in six urban local authorities. Implementation was not necessarily in line with policy or guidance. Issues associated with programme fidelity along with concerns about sustainability as a result of cuts in funding are discussed and implications for policy and future research considered.     

Can the New Deal solve the old problem of aid orphans and darlings? Aid effectiveness in fragile states

The New Deal for Engagement in Fragile States marks an important ideological shift in development co‐operation. Despite this progress, no practical response has been found to the problem of aid co‐ordination. This article traces the issue of aid allocation and highlights lessons from the ‘aid orphan’ and ‘aid darling’ debate. It examines the significant, yet under‐reported, policy process of the New Deal. It argues that deeper engagement with the concept of trust, and renewed focus on the political elements of the agreement, should be key priorities for the International Dialogue on Peacebuilding and Statebuilding.     

Aid and Fiscal Deficits: Lessons from Uganda on the Implications for Macroeconomic Management and Fiscal Sustainability

This article contributes to the ongoing debate on the macroeconomic management of large aid inflows to low‐income countries by analysing lessons drawn from Uganda, where the fiscal deficit before grants, which was largely aid‐funded, doubled to over 12% of GDP in the early 2000s. It focuses on the implications of the widening fiscal deficit for monetary policy, the real exchange rate, debt sustainability and the vulnerability of the budget to fiscal shocks, and argues that large fiscal deficits, even when funded predominantly by aid, risk undermining macroeconomic objectives and long‐run fiscal sustainability.     

POLITICAL BUSINESS CYCLES IN THE NEW KEYNESIAN MODEL

This paper tests various political business cycle theories in a New Keynesian model with a monetary and fiscal policy mix. All the policy coefficients, the target levels of inflation and the budget deficit, the firms' frequency of price setting, and the standard deviations of the structural shocks are allowed to depend on “political” regimes: a preelection versus postelection regime, a regime that depends on whether the president (or the Fed chairman) is a Democrat or a Republican, and a regime under which the president and the Fed chairman share party affiliation in preelection quarters or not. The results provide evidence that several coefficients are influenced by political variables. The best‐fitting specification, in fact, is one that allows coefficients to vary according to a regime that depends on whether the economy is in the few quarters before a presidential election or not. Monetary policy becomes considerably more inertial before elections and fiscal policy deviations from a simple rule are more common. There is some evidence that policies become more expansionary before elections, but this evidence disappears for monetary policy in the post‐1985 sample. (JEL C11, D72, E32, E52, E58, E63)     

The Migration–Development Nexus Evidence and Policy Options State–of–the–Art Overview

In September 2001, the Danish Ministry of Foreign Affairs commissioned a study of the present and potential links between migration and development. In January 2002, the new Danish Government announced a decision to enhance the links between its aid and refugee policies as part of the overall focus on poverty reduction. The present paper provides a state–of–the–art overview of current thinking and available evidence on the migration–development nexus, including the role of aid in migrant–producing areas. It offers evidence and conclusions around the following four critical issues: Poverty and migration People in developing countries require resources and connections to engage in international migration. There is no direct link between poverty, economic development, population growth, and social and political change on the one hand, and international migration on the other. Poverty reduction is not in itself a migration–reducing strategy. Conflicts, refugees, and migration Violent conflicts produce displaced persons, migrants, and refugees. People on the move may contribute both to conflict prevention and reconciliation, and to sustained conflicts. Most refugees do not have the resources to move beyond neighbouring areas, that is, they remain internally displaced or move across borders to first countries of asylum within their region. Aid to developing countries receiving large inflows of refugees is poverty–oriented to the extent that these are poor countries, but it is uncertain what effect such aid has in terms of reducing the number of people seeking asylum in developed countries. Furthermore, such aid may attract refugees from adjacent countries experiencing war or political turmoil. Migrants as a development resource International liberalization has gone far with respect to capital, goods and services, but not to labour. International political–economic regimes provide neither space nor initiatives for negotiations on labour mobility and the flow of remittances. There is a pressing need to reinforce the image of migrants as a development resource. Remittances are double the size of aid and target the poor at least as well; migrant diasporas are engaged in transnational practices with direct effects on aid and development; developed countries recognize their dependence on immigrant labour; and policies on development aid, humanitarian relief, migration, and refugee protection are internally inconsistent and occasionally contradictory. Aid and migration Aid policies face a critical challenge to balance a focus on poverty reduction with mitigating the conditions that produce refugees, while also interacting constructively with migrant diasporas and their transnational practices. The current emphasis on aid selectivity tends to allocate development aid to the well performing countries, and humanitarian assistance to the crisis countries and trouble spots. However, development aid is more effective than humanitarian assistance in preventing violent conflicts, promoting reconciliation and democratization, and encouraging poverty–reducing development investments by migrant diasporas. The paper is a synthesis of current knowledge of migration–development dynamics, including an assessment of the intended and unintended consequences of development and humanitarian policy interventions. We examine whether recent developments in the sphere of international migration provide evidence of a “crisis”, as well as the connections between migration, globalization, and the changing nature of conflicts. We summarize current thinking on the main issues at stake and examine available evidence on the relations between migration and development. Then the consequent challenges to the aid community, including the current debates about coherence and selectivity in aid and relief are discussed and, finally, we elaborate on the four conclusions of the overview.     

Aid, Relief, and Containment: The First Asylum Country and Beyond

A fundamental problem that confronts the European Union today is how it can maintain its commitment to the institution of asylum while checking irregular migration and the abuse of its asylum system. In order to explore a response to this dilemma the paper addresses the following questions: what role can relief and aid policies play in influencing migration patterns? What should be the appropriate approach to the granting of relief and aid to developing countries of first asylum? Should it be viewed as a part of the larger problem of development or be treated as a distinct issue? What kind of a relief/aid model will help refugees return to post–conflict societies and stop the conflict from reproducing itself? The paper examines two different approaches to address these questions: the alliance–containment approach and the distributive–developmental approach. It also looks at some empirical evidence, which reveals that at present it is a conservative alliance–containment approach that informs EU relief and aid practices. This approach, however, does not help achieve the stated objective of checking abuse of asylum and migration procedures while sustaining a commitment to a liberal asylum regime. The paper goes on to identify the gaps in EU policy and the lessons that can be drawn. It concludes by looking at different policy alternatives and suggesting the adoption of a reformist distributive–developmental model. The implementation of this model holds out the hope of reverting to a more liberal asylum regime while controlling irregular migration and “bogus” asylum seekers, for the reformist distributive developmental model takes a more long–term view of migration trends and also seeks to address the growing North–South divide.     

DFID governance programming in Nigeria: What difference has thinking and working politically made in practice?

The UK Department for International Development's country office in Nigeria (DFID Nigeria) has gradually adopted a thinking and working politically (TWP) approach in its governance programming. The initial focus on strengthening analysis has progressively been linked to discussion about the country and programme strategy, as well as programme‐management practices. Important lessons can be learned from this experience on how the TWP approach can be applied in practice. The article addresses three research questions: (1) To what extent have DFID Nigeria and its governance programmes adopted a TWP approach? (2) How has the TWP approach influenced the design and delivery of programming? (3) Has the application of the TWP approach enhanced the results of the DFID governance programming? Using project documentation and wider theoretical literature, but mainly relying on extensive participant observation within DFID Nigeria programmes, the article uses a historical perspective to outline how the TWP approach has been applied in Nigeria over 15 years of programme design, delivery, lesson‐learning and refinement . Published evaluation reports are used to provide evidence of programme results. DFID Nigeria and its programmes have progressively adopted TWP principles. This has led to clear changes in country strategy and programme design, as well as programme‐management practices. There is some evidence that the adoption of these principles has enhanced the results of DFID Nigeria programmes. By focusing on experimentation and “small bets,” TWP has proven relatively successful in generating and supporting ‘islands of effectiveness,’ but has had more limited impact in terms of generating more systemic, transformational change. The results obtained in Nigeria using the TWP approach have depended not only on Nigeria's political economy but also on the political economy of the development agency and donor country. DFID Nigeria's ability to engage in critical self‐reflection and to create an authorizing environment for risk‐taking have been vital to create enabling conditions for the TWP approach. However, other aspects of DFID and the UK's political economy are creating constraints that limit the prospects to go further and to go deeper in adopting the principles of TWP.     

What are the likely interactions among innovation,government debt,and employment?

The study here analyzes the interactions among labor, R&D intensity, and public expenditure on education (indicators of innovation), considering public debt of countries. The study is based on 27 European countries over the 1995–2009 and applies multiple regression analysis. Main findings seem to be: a significant interaction of public expenditure on education and R&D intensity with employment rate, whereas an increase of general government consolidated gross debt has a negative interaction for employment rate as well as for technology indicators. The theoretical framework and empirical evidence suggest vital political economy implications to support employment rate during contractions of the business cycle. In particular, considering the specificity of the economic structure of countries, a fruitful lung-run political economy of growth should slowly dry out public debt by supporting GDP growth, rather than reducing government debt with high taxation and balanced-budget rules, in order to decrease frictional effects for patterns of economic, technological, and employment growth.     

How Do Workers’ Remittances Respond to Lending Rates?

The literature on migrants’ motivation to remit ranges from self‐interest to altruism where studies analyse the impact from home country interest rates or interest differentials between home and host countries. We reinterpret the interest rate elasticity of remittances as a form of debt‐repayment responsiveness rather than based on opportunistic motivation. Modelling altruistic transfer and debt‐repayment, we find that, for a panel of countries, the long‐run responsiveness of remittances to changes in real lending rates is negative. This suggests that an expansionary (contractionary) monetary policy is most likely to lead to an increase (reduction) in remittances in the long‐run. In contrast to this, the short‐run impact of interest rate changes on remittances is positive.