What Explains the Success or Failure of Structural Adjustment Programmes?

TLDR

The paper investigates the causes of success or failure of adjustment programmes using a new database of 220 reforms. It analyzes these programmes through this database. The study finds that domestic political‑economy forces drive reform outcomes, while donor effort variables are only spuriously correlated and have no causal effect, implying that policy‑based aid should focus on domestic conditions.

Abstract

This paper analyses the causes of success or failure of adjustment programmes, using a new database on 220 reform programmes. We find that the success or failure of reform depends on domestic political‐economy forces. A few donor‐effort variables are also highly correlated with the probability of success. However, once these effort variables are treated as endogenous, there is no relationship between any of them and the success or failure of reform. These results have clear implications for how the international community should approach policy‐based aid.