Incentivizing Reforms that Expand Political and Economic Freedom in Developing Countries: Which Tools Work?

Wealthy countries and international organizations (IOs) have adopted a wide range of strategies to spur, strengthen, and solidify economic and political liberalization efforts in developing countries. They have employed positive conditionality - e.g. through the Heavily Indebted Poor Countries Initiative, the Millennium Challenge Account, and the WTO accession process - to alter the incentives of developing country leaders and shore up the bargaining power of domestic reformers. They have utilized moral suasion tools, such as the World Bank's Doing Business Report, to increase the reputational costs of resisting reform. They have also imposed financial sanctions to deter backsliding and reform reversals. Scholars and policymakers generally agree that these types of policy instruments can hasten the adoption of growth-accelerating reforms. However, there is remarkably little evidence about the conditions under which such tools are most and least effective. This project will significantly advance our understanding of how wealthy countries and IOs effectively advance the cause of economic and political freedom by creating and analyzing a first-of-its-kind cross-national dataset on the influence and impact of various reform promotion tools (e.g. performance-based aid programs, IO accession procedures, benchmarking exercises). We will create this dataset by employing a specialized firm to survey senior government officials, donor agency and IO representatives, and civil society leaders in 130 developing countries. After completing the data collection phase of this project, we will distribute our survey findings to approximately 10,500 policymakers, practitioners, opinion leaders, and journalists, and undertake a wide-range of follow-on publication and outreach activities. We expect that our findings will spark a public debate - and instigate painful introspection within aid agencies and IOs - about how existing policy instruments can be retooled for maximum impact.