The State of Industry in Sub-Saharan African Countries Undertaking Structural Adjustment Programmes

Industry in Sub-Saharan African programme countries is in a severe crisis. Is this affecting the industrial base necessary for future growth and leading to de-industrialization? Or is the industry undergoing a process of efficient restructuring whereby the lack of growth is the result of inefficient industries shutting down? The analysis in this paper of a broad range of indicators provides some support for the hypothesis that Africa is on the brink of de-industrialization. The cross-country analysis, which compares Sub-Saharan programme countries with other programme countries, suggests that the programmes in Sub-Saharan Africa may have failed to account for indigenous structural characteristics that would have required a different approach with respect to the industrial sector.

The implementation of policy conditions in structural adjustment programmes: The case of Sub-Saharan African countries

If, as some recent research seems to suggest, the economic performance of countries that comply with World Bank conditionality is significantly better than that of countries that do not comply, then an important topic for research is the identification of factors that increase the likelihood of programme countries’ compliance. This paper starts research in this area by employing data recently released by the World Bank that allow a classification of Sub-Saharan African programme countries according to their compliance with adjustment lending conditionality. The empirical results are sensible and have important implications for the design and management of policy-based lending.

The importance of a better design of conditionality for improving implementation of World Bank-supported reforms: The case of Sub-Saharan African countries

Some recent empirical research suggests that the implementation of policy reforms is largely dependent on domestic political economy factors. This finding is taken to suggest that aid and adjustment lending should only be provided to those countries that, on the basis of certain characteristics, are more likely to implement policy reform. We put these issues to scrutiny by employing a sophisticated World Bank dataset to explain Sub-Saharan African programme countries’ compliance record. Our empirical results highlight the role of a country’s income status, economic performance and political stability during the programme, the external economic environment, the size of financial support for the reform programme, and initial macroeconomic conditions. These results contradict the evidence underpinning the selectivity approach to policy-based lending and suggest that poor compliance is not the result of low implementation capacity and poor institutional quality alone but also a consequence of poor policy design.

Financial liberalisation and industrial development in Malawi

It has been suggested that financial liberalisation may be a key policy to promote industrialisation as it removes the credit access constraint on firms, especially small and medium ones. We investigate the effect of credit expansion in the wake of liberalisation on the structure of the industrial sectors in Malawi and find that, in contrast to the hypothesis above, it resulted in an increase in industrial concentration and a decrease in net firm entry, especially in sectors that are more finance dependent. The case of Malawi is interesting because financial liberalisation has been justified precisely as a means for industrial development and because the implementation of the policy has been regarded as relatively successful.

Development policy lending, conditionality and ownership: A political economy model

Is the World Bank’s Development Policy Lending likely to enhance ownership and have greater effectiveness than structural adjustment? We specify a dynamic common agency model in which a government committed to reform faces domestic opposition from interest groups. The dynamic specification, which is original in the context of policy reforms supported by the International Financial Institutions (IFIs), is essential to allow the strength of special interest groups to arise endogenously during the reform process. We show that conditionality could alter the country’s political equilibrium and that the design of conditionality could have an impact on the effectiveness of conditionality by reducing domestic opposition to the reform programme. However, depending on country-specific circumstances, conditional assistance could lead to lower social welfare. Thus, for conditionality not to be inconsistent with ownership, its design must be appropriate to the country circumstances and directly affect the domestic political constraint. Unless the IFIs are prepared to design the content of conditionality according to recipient countries’ special characteristics, conditionality is likely to remain inconsistent with ownership

Business lending and bank profitability in the UK

Purpose: The purpose of this paper is to investigate the importance of business lending as a source of bank profits in the UK banking system. The paper also examines whether the profitability of business lending is mostly driven by heterogeneous characteristics of individual banks or whether it is affected by systematic characteristics such as bank size and ownership structure. Design/methodology/approach: The study uses bank level data from BankScope for a total sample of 83 UK banks and building societies. The period under consideration extends from 2005 to 2009. Econometric estimation is by panel fixed effects. Findings: Our empirical results show that business lending is a statistically significant determinant of bank profits. However, this average effect masks important systematic differences among banks. In particular, we find strong size effects: the profitability of business lending is considerable for small banks but negligible for large banks. In contrast, we could not detect any ownership effects for domestic and foreign banks. These findings persist when the occurrence of the financial crisis is accounted for. Research limitations/implications: Interestingly, our study relates these findings to the process of financialisation. Yet, the extent of the latter and its impact on various groups of banks (i.e., large, small, domestic and foreign banks) have not been examined. Further research in this area would make an important contribution to the literature.. Practical implications: Our findings suggest that business lending is not a driving factor of profitability for large banks. One possible policy implication – which may be of interest especially to regulators and policy makers – is that capital injections into the larger banks per se are unlikely to lead to an expansion of credit to business. Originality/value: There is very little research in the literature on the questions addressed in this paper, especially for the UK banking system. Moreover, the process of financialisation, which motivates the enquiry of this paper, is a growing area of research. Thus, the contribution of this paper is twofold

Polyarchies, Competitive Oligarchies, or Inclusive Hegemonies? 23 Global Intergovernmental Organizations Compared

In this paper, I assume that global intergovernmental organizations (GIGOs) function as "enablers" of interstate liberal politics by way of their multilateral institutional frameworks. To support this view, I recall and adapt the classical concept of "polyarchy," coined in the early 1950s by Robert A. Dahl. It consists of a two-dimensional theoretical construct applicable for measuring the level of liberalization in modern political societies. It follows that the more actors who take part in politics, and the more that institutions allow political opposition, the more open a society (of states) is likely to be. I thus wish to assess and rate the level of "polyarchization" of 23 GIGOs that cover various issue areas and fit some specific criteria (for example, more than one hundred member states from at least three different continents). The methodology section includes a scorecard that I have specially developed to help achieve these research objectives

The choice of currency and policies for an independent Scotland: a debate through the lenses of different economic paradigms

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