The Effectiveness of Policy Conditionality: Eight Country Experiences

This article analyses the effectiveness of the setting of policy conditions in exchange for aid. Given the emerging consensus that this process is not effective, this article focuses on explaining why not. In analysing the experiences of eight countries — Bangladesh, Cape Verde, Mozambique, Nicaragua, Tanzania, Uganda, Vietnam and Zambia — an ‘augmented’ principal–agent framework proved valuable in explaining why policy conditionality is not effective in these countries. The article concludes that donors should focus on some simple policy outcomes (ex post) instead of extensive policy conditions (ex ante).