Conditionality & its management by Bretton Woods Institutions

Magisterarbeit von Lukas Pichler

Abstract:

In the present master thesis shall be analysed hidden effects ensuing from approaches on Conditionality intended at the Bretton Woods Conference to be used by IMF and World Bank, as well of those that were finally executed by them. The main focus in this research lies on the altering management of that what is interpreted as Conditionality by these institutions, namely a barter of economic policy adaptations against complementary lending. In order to comprehend the accompanying implications behind, this view will be enriched of new aspects:

The first chapter highlights selected analogies to a related concept used widely within positivistic civil law, revealing, next to an even-handed functioning of the basic mechanism, also a concentration of institutional roles that would not be permissible on national level. The second analysis introduces to the historical background of the Bretton Woods Conference and evaluates according proposals concerning Conditionality. In the following there are taken into consideration global political evolvements too that opened the door towards ulterior fields of appliance, of whom development resulted being the most fertile one. This leads directly to the elaboration of the two basic strategies followed by the Bretton Woods Institutions in order to leverage their restricted financial capabilities.

Finally conclusions are drawn about the role that Conditionality plays within the value-creating chain of an international financial institution, whose outputs, like those of IMF and World Bank, are interpreted in terms of global public goods. The missing link between Conditionality and GPGs is bridged through the introduction of the Conditionality-GPG-Profile that allows the obtainment of a respective profile of Conditionality-bound institutional efforts.

Table of Contents:

	Abstract	III
	Acronyms and Abbreviations	VII
1.	Introduction	1
2.	The basic concept of Conditionality	5
2.1	Conditionality as it is seen by the Bretton Woods Institutions	5
2.2	The „Conditional Contract” of Italian Civil Law	6
2.2.1	The implications	8
2.2.2	Evaluation of Civil Law conditional concept	11
2.3	Conditionality and the Bretton Woods Conference	13
2.3.1	Political background of the Bretton Woods Conference	14
2.3.2	Keynes’ Conditionality underpinnings	18
2.3.2.1	Evaluation of Keynes’ basic ideas on Conditionality	25
2.3.3	White’s Conditionality underpinnings	27
2.3.3.1	Evaluation of White’s basic ideas on Conditionality	30
3.	Evolution of Conditionality since Bretton Woods	33
3.1	The first years	33
3.2	Widening possibilities for the application of Conditionality in the next years	35
3.3	Development as argument for the application of Conditionality	38
4.	Relevant aspects of the actual application of Conditionality within collective action	44
4.1	Starting situation for collective action and Conditionality	44
4.2	Two basic strategies of IFIs	46
4.2.1	Conditionality oriented towards crisis management	46
4.2.2	Conditionality oriented towards prevention	48
5.	Conditionality and GPGs	50
5.1	Identifying the role of Conditionality in the value-chain of IFIs	50
5.2	Evaluation approach of IMF’s New Programs’ Conditionality	56
5.2.1	Classification of GPGs	56
5.2.2	Classification of Conditionality	57
5.2.3	The Conditionality-GPG-Profile	58
	The following pages contain the instructions that explain how the Conditionality-GPG-Profile works	58
5.2.3.1	Description of C-GPG-Profile structure	58
5.2.3.2	Consequences of Structural Conditionality about „General government tax and expenditure reform” and the PG of ”Global Security”	66
6.	Conclusion	69
	Appendix	71
	References	77