Poverty Reduction Strategies and Their Impact on Democratization in Developing Countries
Year: 2009
Type: preprint
Abstract: Introduced in 1999, poverty reduction strategies (PRS) are currently the World Bank and IMF’s main instrument to regulate access to debt relief and concessional financing from both institutions. By replacing the former structural adjustment programs this new approach seeks to increase the participation of civil society in the design and implementation of the national development strategy. As a result, it is expected that the voices of formerly excluded social groups help to formulate more effective development strategies leading to welfare-improving outcomes. In terms of democratization, it is assumed that PRS reduce inequalities within civil society and strengthen democratic accountability of the financial aid-seeking government towards its citizens and versus other political institutions. Theoretically, this paper proposes that World Bank and IMF programs often substantially interfere with domestic politics by changing the prevailing power balance between pro-democratic and anti-democratic forces. Thus, the question arises whether the participation in different types of World Bank and IMF programs also has a different impact on the quality of democracy in recipient countries. Empirically, this paper analyzes the joint effects of World Bank and IMF programs on democratization in 80 developing countries from 1974 to 2007. Our results show that non-concessional programs have no significant effect on the quality of democracy in recipient countries, whereas concessional programs have strong positive effects on different dimensions of democracy. In relation to the new PRS approach, evidence suggests that broad-based participation of civil society in the PRS process does not automatically result in higher participation at the national level. However, a country’s participation in poverty reduction programs significantly increases the degree of checks and balances on the government and the level of civil liberties. 1.
Source: SSRN Electronic Journal
Authors: Sophia Melody Hänny, Katharina Michaelowa
Institution: University of Zurich
Language: English
Subfield: Development
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1483835758