Bank review: ‘one-size fits all’ solutions persist

26 July 2004

The World Bank’s Operation Evaluation Department (OED) released its 2003 Annual Review of Development Effectiveness (ARDE) in June. The review examines the “effectiveness of Bank support in helping borrower countries put in place policies that are conducive to sustainable poverty reduction” for the years 1999 to 2003.

This objective itself is problematic, suggesting that there is no debate over which policies are conducive to poverty reduction. This concern was highlighted by the bias in the selection of the four policy indicators used to evaluate if developing countries’ policies are improving: the Bank’s internal country policy and institutional assessment, the Heritage Foundation’s index of economic freedom, the Economist’s index of country risk and the Political Risk Service Group’s international country risk guide.

Picking winners

The report concludes that the Bank has been “reasonably good” at aligning its support with countries that are improving their policies. It finds that the chances for successfully inducing pro-poor policies is significantly reduced in countries with a “poor or non-existent track record”. Yet, inevitably, poor track records are put down to the failure of borrowers to implement structural adjustment programmes, while the policy content of the programmes is left unquestioned. The Bank has had “only modest success” in curbing corruption.

little or no attention to alternative perspectives

Participation insufficiently thought through

The strongest sense of ownership is developed “where a highly inclusive participatory process is conducted in tandem with the country’s normal political processes.” Uganda is cited as best practice. The review finds, however, that the potential of the Poverty Reduction Strategy Paper for fostering country ownership is “undermined by its role as condition for access to concessional assistance from the Bank and Fund.” Moreover, “the attempt to broaden participation within society beyond government was perhaps insufficiently thought through.”

Inadequate country knowledge

The review vindicates Bank critics who accuse the agency of ‘one-size fits all’ policy reform. The Bank’s performance “has been mixed, hampered in some cases by inadequate country knowledge, in others by insensitivity to country policymaking styles, and in still others by attempts to transplant policies and institutions without adequate analysis of the context.” In transition economies, the review points to a recent OED evaluation which found that the “sequencing of reforms was often wrong.”

Costa Rica and Uruguay are cited as examples where the Bank-set pace of reform was inappropriate for country context. Other countries provide examples where economic analysis has missed the mark. In Zimbabwe, the report found that inadequate analytical work had led to policy recommendations “leading to the rapid accumulation of additional debt”. As for examples of good policy reform results, the review offers the observation that Chinese reforms have been successful despite a “rejection of approaches based on conditionality”.

Conditionality is effective in linking Bank support to reform “only in certain circumstances”. The review suggests that outcomes-based conditions are less ambiguous and “could also provide more flexibility to the borrowing country to meet objectives in the best way under the circumstances.”

The review concedes that there are “tensions between the use of policy indicators which are based on the premise that their underlying criteria reflect good policies at all times and in all places and the findings that good policies have context specific elements.”

Narrowly focused

The “Bank has done a good job in aggregating knowledge but has been less successful in fostering adaptation to country contexts.” A survey of Bank clients found that the Bank is “too narrowly focused in the analyses and ‘best practices’ that it presents with little or no attention to alternative perspectives or to individual country circumstances.” Several said that the “Bank’s insistence that its approach is the only correct approach generates mistrust and suspicion.” Respondents suggested the increased use of local expertise.