Aid Modalities Matter: The Impact of Different World Bank and IMF Programs on Democratization in Developing Countries
Aug 28, 2016
Kassandra Birchler, Sophia Limpach, Katharina Michaelowa
International Studies Quarterly
Birchler, K., Limpach, S., & Michaelowa, K. (2016). Aid Modalities Matter: The Impact of Different World Bank and IMF Programs on Democratization in Developing Countries. International Studies Quarterly, 60(3), 427-439. doi:10.1093/isq/sqw014
Many argue that autocratic regimes allocate revenues from foreign aid with the aim of stabilizing their rule rather than serving economic and social development. However, donors often condition foreign aid on reforms in recipient states. We argue that when those conditions for reform focus on participative processes and government accountability, they positively affect democratization. We evaluate our claim based on different types of World Bank and IMF lending programs for a panel of 100 low- and middle-income countries over the years 1980Ð2011. Our results suggest that aid positively affects democratization when it strengthens domestic accountability mechanisms and thereby reduces its fungibility for recipients. The World Bank and the IMFÕs poverty reduction strategy programs provide a notable case of this effect.