When I was in Ghana, the Ghanaians were quick to remind me that Ghana's election would be shortly after Obama was reelected (they hoped) in America--or as they liked to call it--"Obamaland." And sure enough, their election is set to take place on Dec. 7. Though four candidates are running, the contest is between the current President John Mahama from the National Democratic Congress and Nana Akufo-Addo of the New Patriotic Party. According to an article on VibeGhana.com, The debates have dealt primarily with eliminating corruption in government and managing the country's resources (i.e. oil, cocoa, etc.).
In the debates, Akufo-Addo asserted that he would lead by example in eliminating governmental waste and corruption. In terms of managing the profit from the recently-established oil industry, Akufo-Addo said that he would make secondary school free with these funds. President Mahama pointed out that his administration had already begun work to ensure that oil profits stay with Ghanaians, and he declared that in the future, he would work to pass legislation encouraging foreign extraction companies to buy products from Ghana and employ Ghanaians. On this topic, he said, "It doesn’t pay to have such a God-blessed resource and just have foreigners come and take it away without any benefit to your people."
Concerning corruption, former Ghanaian president John Rawlings, who still exerts a strong influence on public opinion, spoke out against governmental corruption. According to the Economist he proclaimed, "Corruption permeates all facets of our society and it is because of the deep rooted moral and spiritual impurity that is currently embedded in our society." Interestingly, it is unclear whether Rawlings will support the current president or the opposition party. He initially endorsed his wife's bid for the presidency as a third-party candidate, but her paperwork was rejected so her candidacy has ended. He had met with Akufo-Addo, even though he is still considered to be a member of the NDC. Some argue that his endorsement is of little importance because "Ghanaians like him but there are just as many people who don't like him."
Regardless of political machinations, it is refreshing to hear key African leaders speak out in defense of their country's resources and against governmental corruption. Though the Mo Ibrahim Foundation found no African leader worthy of the five million dollar prize for "achievement in African leadership," Ghana scores relatively high in all four categories that the Foundation considers (Safety & Rule of Law, Participation & Human Rights, Sustainable Economic Opportunity, and Human Development). Initiatives like the ones to eliminate government corruption and promote healthy economic growth will only increase its scores in the future, so maybe the Foundation will deem Ghana's next president worthy of its leadership award.
Saturday, November 24, 2012
Friday, November 23, 2012
Education (or lack thereof) in South Africa
This video from The Economist concerning South Africa's failing educational system supplement's my earlier post on the downturn of South Africa. It clearly shows a link between the quality of education of a country and economic growth/decline. Over half of young people in South Africa are unemployed because many do not have the requisite skills for a job. This mismatch between the labor market and the job market is endemic, and only a revamped educational system will solve it. The teacher's union will have to concede that it must not pursue policies that promote and protect lazy and ignorant teachers. Nelson Mandella's party, the African National Congress, needs to ensure that both blacks and whites have equal access to quality education. (Note the gap between the educational attainment of blacks and whites in this video.) The party should engender a higher level of respect for the teaching profession and ensure that those who enter the teaching profession are compensated according to their competence and ability. If the problems of the educational system are properly addressed, the future of South Africa's economy will look much brighter.
Tuesday, November 13, 2012
The City of the Future
"Can you imagine a world in which your daily existence has no detrimental impact on the environment? If so you might be living in an eco-city." This is a quote from a recent BBC video that features an eco-city--Tianjin--that the Chinese are building from scratch. (The land used to be a wasteland.) It should be finished by 2020. The premise is to try to make the easy choices the right choices. For instance, the city will provide easy access to public transportation--such as hybrid buses. Also, the city planners have ensured that places of work and leisure are situated close together.
Just because it is eco-friendly does not mean it is inefficient. At least 350,000 people are expected to live there, and 600 companies, bringing more than $7 billion U.S. dollars have already signed on. In the video, the BBC journalist interviewed one of the city planners. The city planner remarked that the eco-friendly features of the city are not very expensive if they are planned from the beginning. He said that they are trying to balance the goals of economic efficiency and environmental protection, which are not necessarily mutually exclusive. While they could have idealistically targeted 100% renewable energy, they are aiming for 20% renewable energy because they believe this is a goal that the market can support. This innovated atmosphere makes Tianjin a "hot bed of ideas" because many of companies are using it as a platform to develop "green solutions."
One of the city-dwellers commented that it actually is relatively cheaper to live there than elsewhere even though it is an eco-friendly city. She can walk to work, walk to school, and walk to the shopping center. While the city planner admits that they do not have all the kinks worked out yet, they are well on their way to creating something that other cities can replicate. China, a signer of the Kyoto Protocol, is clearly committed to green innovation. America should also get on board because a city like Tianjin is the city of the future.
Just because it is eco-friendly does not mean it is inefficient. At least 350,000 people are expected to live there, and 600 companies, bringing more than $7 billion U.S. dollars have already signed on. In the video, the BBC journalist interviewed one of the city planners. The city planner remarked that the eco-friendly features of the city are not very expensive if they are planned from the beginning. He said that they are trying to balance the goals of economic efficiency and environmental protection, which are not necessarily mutually exclusive. While they could have idealistically targeted 100% renewable energy, they are aiming for 20% renewable energy because they believe this is a goal that the market can support. This innovated atmosphere makes Tianjin a "hot bed of ideas" because many of companies are using it as a platform to develop "green solutions."
One of the city-dwellers commented that it actually is relatively cheaper to live there than elsewhere even though it is an eco-friendly city. She can walk to work, walk to school, and walk to the shopping center. While the city planner admits that they do not have all the kinks worked out yet, they are well on their way to creating something that other cities can replicate. China, a signer of the Kyoto Protocol, is clearly committed to green innovation. America should also get on board because a city like Tianjin is the city of the future.
Wednesday, November 7, 2012
Recessions and the Multiplier
In our IPE class, we discussed whether the IMF has been misguided in telling countries to tighten their belts in the face of economic recession. A recent article in the Economist points out that although the IMF did warn that austerity might be painful in 2010, it underestimated the extent of the pain. This miscalculation laid the groundwork for many criticisms of the IMF's policies. But what exactly did/does the IMF use to predict the effect of its policies? The fiscal multiplier.
According to the Economist, a fiscal multiplier "describes the change in GDP that is due to a change in tax-and-spending policy." A fiscal multiplier can work both ways. It can be used to predict the amount of economic growth that will result from a stimulus or the amount of economic decline that will result from austerity. In the latter case, a fiscal multiplier of 1.5 means that for every dollar of spending cuts, there is $1.50 decline in GDP. Therefore, when the IMF advocates fiscal austerity, it is (hopefully) expecting a relatively low fiscal multiplier. While some economists argue that fiscal austerity can actually increase economic growth--even in the short-term--the general consensus is that austerity leads to short-term (but hopefully not long-term) decline.
Here's how the multiplier played out during the 2008 crisis: While many governments initially turned to stimulus to try to get out of the recession, in 2010 the IMF recommended fiscal austerity to try to decrease government deficits. It based this recommendation on the belief that the multiplier would be 0.5. (For every $1 in government spending cuts, there would be $.50 drop in GDP.) However, the actual fiscal multipliers since the recession have been much higher (between 0.9 and 1.7), leading many economists to question whether the IMF's recommendations hindered, rather than helped, countries' progress in overcoming the recession.
According to the Economist, a fiscal multiplier "describes the change in GDP that is due to a change in tax-and-spending policy." A fiscal multiplier can work both ways. It can be used to predict the amount of economic growth that will result from a stimulus or the amount of economic decline that will result from austerity. In the latter case, a fiscal multiplier of 1.5 means that for every dollar of spending cuts, there is $1.50 decline in GDP. Therefore, when the IMF advocates fiscal austerity, it is (hopefully) expecting a relatively low fiscal multiplier. While some economists argue that fiscal austerity can actually increase economic growth--even in the short-term--the general consensus is that austerity leads to short-term (but hopefully not long-term) decline.
Here's how the multiplier played out during the 2008 crisis: While many governments initially turned to stimulus to try to get out of the recession, in 2010 the IMF recommended fiscal austerity to try to decrease government deficits. It based this recommendation on the belief that the multiplier would be 0.5. (For every $1 in government spending cuts, there would be $.50 drop in GDP.) However, the actual fiscal multipliers since the recession have been much higher (between 0.9 and 1.7), leading many economists to question whether the IMF's recommendations hindered, rather than helped, countries' progress in overcoming the recession.
Sunday, November 4, 2012
African Economies and the Politics of Permanent Crisis 1979-1999
In African Economies and the Politics of Permanent Crisis 1979-1999, Nicolas Van De Walle examines the on-going African economic crisis from a new perspective; like most other analysts, he explores the (mostly failed) economic policies that have contributed to a lag in African economic recovery, but he also broadens the discussion to consider political regimes and how their past decisions impact the current economy. Through his analysis of "neopatrimonial" governmental regimes and the dismal performance of African economies, Van De Walle concludes that postcolonial aid flows to Africa have actually contributed to, rather than prevented, continued economic crisis.
Though leaders first shied away from implementing the reforms required by institutions and countries providing aid, they began to realize that partial implementation not only served to placate donors, but also to derive political benefits. For instance, if they "privatized" certain industries, their personal bank accounts could reap the rewards. In essence, because regimes are first and foremost self-preserving, leaders only implemented reforms that strengthened, or at least did not threaten, their power and control. Leaders who might be perceived as relatively responsible inflicted fiscal austerity on populations by decreasing investment in infrastructure in order to balance out the increases in governmental consumption. In the long run, partial implementation generally resulted in either warlordism--due to an increasing focus on rent-seeking rather than rule of law--or an even greater centralization of power--due to increased governmental consumption. To Van De Walle, toothless statements of conditionality (concerning reform) that are attached to aid have contributed to, rather than solved, Africa's political corruption and economic hardship.
The political corruption inherent in many African governments is a byproduct of "neopatrimonialism." Van De Walle uses this term to describe hybrid governments that adopt the appearance of a Western rational-legal administration but continue to operate with clientelist tendencies, doling out privileges and offices to family members, friends, and political supporters. These regimes have high levels of autonomy, despite low capacity. Though many analysts equate autonomy with capacity, Van De Walle points out that while African governments were "endowed with little legitimacy" after colonization, (leading to low capacity), they remain highly stable and autonomous because non-state actors (i.e. interest groups) do not have enough resources or organizational structure to challenge the government.
Van De Walle further argues that postcolonial order has been maintained despite a long period of economic downfall and crisis because, and not despite, aid flows. For instance, even if commodity prices dropped sharply, governments did not feel as much pressure to change economic policies because aid flows sheltered them from the shock. Instead of increasing Africa's economic independence, aid flows have actually increased Africa's continued dependence on aid flows. Nevertheless, donors continue to lend because of internal pressure and few accountability mechanisms for failed programs. Van De Walle believes that institutions, such as the IMF, should reform their practices so that they fully consider a country's circumstances before providing aid and devising statements of conditionality and so that they work with a country's governmental regime rather than above it. For instance, by offering much higher salaries, the IMF has recruited many of the top minds in Kenya to work for it instead of the Kenya government. Though these practices hurt Africa in the long run, Van De Walle expresses hope that Africa's economy will soon recover. His optimism is due to decreasing aid flows to the region, which increases the government's need to respond to shocks and reform out-of-date policies. Nevertheless, his optimism is tempered by the fact that many of the African countries that have adopted democratic systems have not changed economic policies because they still have neopatrimonial governance. However, Van De Walle hopes that democratization will eventually increase political participation, which in turn would increase governmental accountability and lead to economic reform.
Van De Walle's exploration of Africa's permanent economic crisis widens the discussion from a purely economic approach to an economic and political approach. Nevertheless, he leaves some questions unanswered. He neglects to fully analyse the perceptions of Africans concerning donors, such as the IMF. Furthermore, he does not mention what effect, if any, educational reform would have on the economy. Should donors focus on improving the quality of education inside the country so that the skills of the work force will meet the demand of the job sector? Finally, I would have liked him to spend more time discussing the role (if any) that African values and culture play in the continuation of economic recession. Are neopatrimonial tendencies, resulting in clientelism, to some degree inherent in African governance due to the African value of kinship and community? Note that this book was published eleven years ago, and the discussion of African economics has since evolved. Nevertheless, Van De Walle's African Economies and the Politics of Permanent Crisis 1979-1999 greatly contributed to the discussion of African economic recovery by introducing additional components, such as political regimes and donor policies.
Though leaders first shied away from implementing the reforms required by institutions and countries providing aid, they began to realize that partial implementation not only served to placate donors, but also to derive political benefits. For instance, if they "privatized" certain industries, their personal bank accounts could reap the rewards. In essence, because regimes are first and foremost self-preserving, leaders only implemented reforms that strengthened, or at least did not threaten, their power and control. Leaders who might be perceived as relatively responsible inflicted fiscal austerity on populations by decreasing investment in infrastructure in order to balance out the increases in governmental consumption. In the long run, partial implementation generally resulted in either warlordism--due to an increasing focus on rent-seeking rather than rule of law--or an even greater centralization of power--due to increased governmental consumption. To Van De Walle, toothless statements of conditionality (concerning reform) that are attached to aid have contributed to, rather than solved, Africa's political corruption and economic hardship.
The political corruption inherent in many African governments is a byproduct of "neopatrimonialism." Van De Walle uses this term to describe hybrid governments that adopt the appearance of a Western rational-legal administration but continue to operate with clientelist tendencies, doling out privileges and offices to family members, friends, and political supporters. These regimes have high levels of autonomy, despite low capacity. Though many analysts equate autonomy with capacity, Van De Walle points out that while African governments were "endowed with little legitimacy" after colonization, (leading to low capacity), they remain highly stable and autonomous because non-state actors (i.e. interest groups) do not have enough resources or organizational structure to challenge the government.
Van De Walle further argues that postcolonial order has been maintained despite a long period of economic downfall and crisis because, and not despite, aid flows. For instance, even if commodity prices dropped sharply, governments did not feel as much pressure to change economic policies because aid flows sheltered them from the shock. Instead of increasing Africa's economic independence, aid flows have actually increased Africa's continued dependence on aid flows. Nevertheless, donors continue to lend because of internal pressure and few accountability mechanisms for failed programs. Van De Walle believes that institutions, such as the IMF, should reform their practices so that they fully consider a country's circumstances before providing aid and devising statements of conditionality and so that they work with a country's governmental regime rather than above it. For instance, by offering much higher salaries, the IMF has recruited many of the top minds in Kenya to work for it instead of the Kenya government. Though these practices hurt Africa in the long run, Van De Walle expresses hope that Africa's economy will soon recover. His optimism is due to decreasing aid flows to the region, which increases the government's need to respond to shocks and reform out-of-date policies. Nevertheless, his optimism is tempered by the fact that many of the African countries that have adopted democratic systems have not changed economic policies because they still have neopatrimonial governance. However, Van De Walle hopes that democratization will eventually increase political participation, which in turn would increase governmental accountability and lead to economic reform.
Van De Walle's exploration of Africa's permanent economic crisis widens the discussion from a purely economic approach to an economic and political approach. Nevertheless, he leaves some questions unanswered. He neglects to fully analyse the perceptions of Africans concerning donors, such as the IMF. Furthermore, he does not mention what effect, if any, educational reform would have on the economy. Should donors focus on improving the quality of education inside the country so that the skills of the work force will meet the demand of the job sector? Finally, I would have liked him to spend more time discussing the role (if any) that African values and culture play in the continuation of economic recession. Are neopatrimonial tendencies, resulting in clientelism, to some degree inherent in African governance due to the African value of kinship and community? Note that this book was published eleven years ago, and the discussion of African economics has since evolved. Nevertheless, Van De Walle's African Economies and the Politics of Permanent Crisis 1979-1999 greatly contributed to the discussion of African economic recovery by introducing additional components, such as political regimes and donor policies.
Saturday, November 3, 2012
The Global Election
With the election looming only 3 days away, some economists are beginning to speculate about how the next president's policies will affect not just the domestic economy but the global economy. In Stiglitz's recently-published article, "America's Global Election," he laments the fact that although the next American president will have a huge impact on people from other countries, these people get no say in our election. He further argues that the non-Americans overwhelmingly favor Obama's reelection. Though he does not cite any evidence as to why a majority of foreigners support Obama, he contends that the fundamental differences in policy between Obama and Romney justify Obama's support from abroad.
Stiglitz argues that Romney's election would lead us back to Reagan-esque free-market economic policies, which Stiglitz claims "brought about the worst global recession since the 1930’s." He believes Romney's policies--like Reagan's--would continue to shrink the middle class and lead to greater income inequality. For instance, Stiglitz believes that Romney's "tax cuts for the rich," budget cutbacks, and lack of support for ObamaCare would lead America--and other countries--down the wrong path. However, Stiglitz failes to recognize that many of Romney's policies--especially his commitment to cut the corporate tax rate--would create jobs to grow the economy. (See Michael Boskin's article.)
Stiglitz presents a short (and weak) argument concerning both the candidates' views on globalization. He admits that Obama has not done much in regards to trade, finance, and climate change. However, he believes that Romney's policies concerning globalization, (which Stiglitz fails to present in detail), would take the global economy in the "wrong direction." Stiglitz argues that in the area of foreign policy Romney has failed to distinguish himself from Bush. This is a surprising argument considering that after the third and final presidential debate (about foreign policy) many analysts criticized Romney for not distinguishing himself enough from Obama.
A final point that Stiglitz makes is that Romney's stated stance against China does not leave him much room to maneuver if he is elected. According to Stiglitz, Romney "promises to launch a trade war with China, and to declare it a currency manipulator on Day One." Stiglitz points out that Romney fails to recognize that the renminbi has actually been appreciating for years (see graph), and that the stronger the renminbi gets, the more the U.S. will simply turn to other countries with relatively low-value currencies so that we continue to have an abundant supply of cheap goods. Furthermore, Stiglitz asserts that Romney does not understand or acknowledge that many countries are calling the U.S. a currency manipulator because of the Fed's recent "easing" policies.
I hope that whomever is elected will reach across party lines and do what is best for America--and the global economy--regardless of whether it adheres to his party platform.
Stiglitz argues that Romney's election would lead us back to Reagan-esque free-market economic policies, which Stiglitz claims "brought about the worst global recession since the 1930’s." He believes Romney's policies--like Reagan's--would continue to shrink the middle class and lead to greater income inequality. For instance, Stiglitz believes that Romney's "tax cuts for the rich," budget cutbacks, and lack of support for ObamaCare would lead America--and other countries--down the wrong path. However, Stiglitz failes to recognize that many of Romney's policies--especially his commitment to cut the corporate tax rate--would create jobs to grow the economy. (See Michael Boskin's article.)
Stiglitz presents a short (and weak) argument concerning both the candidates' views on globalization. He admits that Obama has not done much in regards to trade, finance, and climate change. However, he believes that Romney's policies concerning globalization, (which Stiglitz fails to present in detail), would take the global economy in the "wrong direction." Stiglitz argues that in the area of foreign policy Romney has failed to distinguish himself from Bush. This is a surprising argument considering that after the third and final presidential debate (about foreign policy) many analysts criticized Romney for not distinguishing himself enough from Obama.
A final point that Stiglitz makes is that Romney's stated stance against China does not leave him much room to maneuver if he is elected. According to Stiglitz, Romney "promises to launch a trade war with China, and to declare it a currency manipulator on Day One." Stiglitz points out that Romney fails to recognize that the renminbi has actually been appreciating for years (see graph), and that the stronger the renminbi gets, the more the U.S. will simply turn to other countries with relatively low-value currencies so that we continue to have an abundant supply of cheap goods. Furthermore, Stiglitz asserts that Romney does not understand or acknowledge that many countries are calling the U.S. a currency manipulator because of the Fed's recent "easing" policies.
I hope that whomever is elected will reach across party lines and do what is best for America--and the global economy--regardless of whether it adheres to his party platform.
Sunday, October 28, 2012
'Tis the Season
With stores beginning to decorate for Christmas, I have been reminded that the holiday season is just around the corner... Though most college students will not start their Christmas gift shopping for a while, a discussion of Christmas gift giving is actually relevant to what we are talking about in IPE.
When I was an intern at American Enterprise Institute, Kevin Hassett, an economist and current advisor for the Romney campaign, shared with us (the interns) an article that he had written about the economic conundrum of Christmas gift giving. The Christmas season is increasingly profitable for retailers as Christmas gifts are becoming more and more extravagent over the years. However, because shoppers usually do not know exactly what the recipient wants, an estimated dead-weight loss of $79 billion dollars plagues the collective group of gift-givers each holiday season. Money would be the most efficient gift to give because then the recipient could simply buy what he/she really desires, eliminating the dead-weight loss. So why does the economically-inefficient practice of Christmas gift-giving continue to be popular? (Or the practice of passing out Halloween candy for that matter...)
Hassett eventually concludes that although economists are sometimes baffled by this apparent inefficiency, the spirit of the season is more than enough of a reason to continue to give gifts. He admits that an individual may not realize what he/she truly would like because his/her experience is limited. Therefore, gift giving provides a way for people to share their own experiences with others (i.e. give someone something that he/she never would have thought about purchasing). Hassett further states, "I believe that the holiday spending binge reflects our attempt to provide each other with the benefits of our collective experience."
How is Hassett's argument relevant to IPE? Well, as we've addressed briefly in class, the IMF and World Bank often give "gifts" of aid to countries that are struggling to stay afloat. However, many times the aid has statements of conditionality attached to it. This is the IMF's way of trying to reform the country's government or economy in hopes that a future economic crisis might be avoided. Nevertheless, though the IMF has threatened to reduce aid if the statements of conditionality are not met, often the aid is not decreased. (In some cases, it has actually increased over the years, despite non-compliance.) Sometimes the government is so corrupt that the aid eventually ends up in the dictator's personal bank account, though the IMF has taken steps to avoid this in recent years. Though the governments that are receiving aid must promise to try to fulfill the statements of conditionality, often these promises are not kept, and the same statements of conditionality are attached to the aid again the next year. Some regimes do work toward implementing reform, though even benevolent regimes only focus on the measures that don't threaten to weaken their power. In some cases, partial reform has been estimated to cause even more problems than no reform at all. Also if the IMF has incomplete information about the politics and regime of the country, (as we talked about on Thursday), then maybe a country is better off not even trying to implement its generic measures.
So during this holiday season, while shoppers are completely justified in giving whatever gifts they choose to give, the IMF, World Bank, and aid-giving countries should consider the "gifts" they are giving. While I don't think that blindly throwing aid at a country with a struggling economy is prudent (especially if the regime in power is corrupt), I do think that statements of conditionality should be reconsidered on a country-by-country basis. Furthermore, these statements should definitely not be toothless; aid should be decreased if a country fails to implement the recommended economic policies.
When I was an intern at American Enterprise Institute, Kevin Hassett, an economist and current advisor for the Romney campaign, shared with us (the interns) an article that he had written about the economic conundrum of Christmas gift giving. The Christmas season is increasingly profitable for retailers as Christmas gifts are becoming more and more extravagent over the years. However, because shoppers usually do not know exactly what the recipient wants, an estimated dead-weight loss of $79 billion dollars plagues the collective group of gift-givers each holiday season. Money would be the most efficient gift to give because then the recipient could simply buy what he/she really desires, eliminating the dead-weight loss. So why does the economically-inefficient practice of Christmas gift-giving continue to be popular? (Or the practice of passing out Halloween candy for that matter...)
Hassett eventually concludes that although economists are sometimes baffled by this apparent inefficiency, the spirit of the season is more than enough of a reason to continue to give gifts. He admits that an individual may not realize what he/she truly would like because his/her experience is limited. Therefore, gift giving provides a way for people to share their own experiences with others (i.e. give someone something that he/she never would have thought about purchasing). Hassett further states, "I believe that the holiday spending binge reflects our attempt to provide each other with the benefits of our collective experience."
How is Hassett's argument relevant to IPE? Well, as we've addressed briefly in class, the IMF and World Bank often give "gifts" of aid to countries that are struggling to stay afloat. However, many times the aid has statements of conditionality attached to it. This is the IMF's way of trying to reform the country's government or economy in hopes that a future economic crisis might be avoided. Nevertheless, though the IMF has threatened to reduce aid if the statements of conditionality are not met, often the aid is not decreased. (In some cases, it has actually increased over the years, despite non-compliance.) Sometimes the government is so corrupt that the aid eventually ends up in the dictator's personal bank account, though the IMF has taken steps to avoid this in recent years. Though the governments that are receiving aid must promise to try to fulfill the statements of conditionality, often these promises are not kept, and the same statements of conditionality are attached to the aid again the next year. Some regimes do work toward implementing reform, though even benevolent regimes only focus on the measures that don't threaten to weaken their power. In some cases, partial reform has been estimated to cause even more problems than no reform at all. Also if the IMF has incomplete information about the politics and regime of the country, (as we talked about on Thursday), then maybe a country is better off not even trying to implement its generic measures.
So during this holiday season, while shoppers are completely justified in giving whatever gifts they choose to give, the IMF, World Bank, and aid-giving countries should consider the "gifts" they are giving. While I don't think that blindly throwing aid at a country with a struggling economy is prudent (especially if the regime in power is corrupt), I do think that statements of conditionality should be reconsidered on a country-by-country basis. Furthermore, these statements should definitely not be toothless; aid should be decreased if a country fails to implement the recommended economic policies.
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