CONDITIONALITY WHEN DONOR AND RECIPIENT PREFERENCES VARY

An extensive literature evaluates the content of conditionality, but the design of conditionality has received less attention. This paper presents a general framework of conditionality, which allows donor and recipient preferences for policy reform and aid to vary, in which previous contributions are incorporated as specific cases. The general approach allows for conditionality as bargaining between donors and recipients: cases where donors impose conditions on unwilling recipients; cases where recipients are willing but unable to implement all conditions; and situations where recipients and donors are clearly in conflict. Ex ante conditionality is shown to be ineffective in promoting reform in all cases and often counter-productive, either inhibiting the reform efforts of sincere governments or undermining its own credibility by encouraging donors to condone slippage. © 1997 by John Wiley & Sons, Ltd.