Killick later developed 15 hypotheses to test the applicability o f agency theory in conditionality problem One o f the hypotheses is to inquire the correction between programme implementation and this

intellectual conviction o f key policymakers about the nature o f the crisis and the necessary remedial actions can be affected by the perception o f the borrowing government toward the BWIs, which play no small roles in providing policy advice regarding, for example, the necessary remedial actions to the borrowing government. When the developing countries feel that their needs are not adequately reflected in the decision-making process o f the BW Is100, such policy advice might be deemed inadequate from the borrowing governments. As a result, it seems doubtful that the level o f intellectual conviction o f key policymakers in the borrowing government will be high.

Another dimension determining borrower ownership is the “efforts toward consensus-building among various constituencies” (Johnson and Wasty, 1993, p. 5). The constituencies here, again, presumably refer to “domestic” agencies within or out the central government. Arguably, the efforts toward consensus-building among various constituencies cannot even begin if consensus cannot be built between the government and the BWIs in the programme and conditionality design. With tools such as conditionality and policy-based lending that entail a certain coercive element, “consensus” seems difficult to build. As one commentator puts it: “W hether publicly acknowledged or not, coercion is often applied to make a country accept what, in the opinion o f the country, is not in its interest. Needless to say, this coercion, an inherent

element in a conditionality package, undermines 'ownership’.” (Dasgupta, 1998, p. 86.)

(emphasis added.) Furthermore, considering decisions relating to conditionality and policy-based lending are made and approved by the Board o f Executive Directors, where developing countries’ need are not adequately addressed from developing countries’

showed that in 17 cases “programme implementation is prejudiced when the objectives o f donors and governments differ, resulting in conflicts o f interest” (Killick, 1998, Table 5.1).

viewpoint, it seems even more difficult to reach a consensus between the BWIs and the borrowing government.

Another way to look at borrower ownership is, as suggested in the report o f External Evaluation o f the ESAF, to look at the perception o f ownership from the donors’ perspective. This report notes that donors tend to see ownership as an acceptance by the recipient country o f donor-driven priorities and programmes. Putting the donors’ perception o f ownership in the context o f the governance structure o f the BWIs where donors have the majority decision-making power, the present thesis proposes that the intensity o f ownership over the BW Is’ programmes might be undermined because o f conflict o f interests between donor and recipient. Under the present governance structure o f the BWIs, donors have the ability to push through decisions relating to lending operations in the Executive Boards, and the application and impact o f these decisions fall largely on developing country members. In the actual negotiation process where policies and programmemes are drawn up, recipient developing countries will also bear in mind the fact that final decision o f the loan lie at the hand o f Executive Directors and, consequently, has to take into account possible donor priorities when concluding policies and programmemes. As a result, the borrowing governments might agree to a set o f policies that they might not regard as reflecting their own priorities.

The reference to the limited existing literature and analysis inferred by the present study so far have revealed that the governance structure o f the BWIs and its reflection on the relationship between the BWIs and the developing countries can affect the intensity o f ownership o f a BWIs programme. In addition, through examining the legal aspect o f

100 This dissatisfaction is voiced, for example, at the Seventh Ministerial Meeting o f the G-24 as early as in 1974: “Present quotas and voting power in the Fund do not reflect adequately the needs or the importance o f the developing countries in the world economy.” (reprinted in: Sauvant, 1981, Vol. V, p. 307).

ownership based on Franck’s theory o f “fairness”, the present study is able to demonstrate how the asymmetric governance structure and operations o f the BWIs might have affected the implementation o f the programme. I f we recall the evidence stated at the beginning o f this sub-section, correlation has been established between programme implementation and the impact o f the SAP. Thus, although direct empirical evidence is not readily available, the governance structure o f the BWIs has arguably undermined the effectiveness o f the SAPs in producing an impact through its various implications on borrower ownership. Admittedly, it has not been possible to gather empirical data to support the possible correlation between the intensity o f ownership and the governance structure o f the BWIs. In addition, there are other factors at play in determining the intensity o f borrower ownership. Nonetheless, it cannot be denied that, from the aforementioned examinations, the relationship between the BWIs and the borrowing developing countries, which is influenced by the governance structure o f the BWIs, does have its ramifications on “ownership” and might have, as a result, undermined programmes and conditions implementation and the effectiveness in producing an

impact.

To conclude, the effectiveness o f the SAPs in producing an impact and the implications o f the governance structure o f the BWIs on this effectiveness might be impossible to ascertain empirically. Nevertheless, empirical evidence has been provided to demonstrate the correlation between effectiveness in producing an impact and the extent to which SAPs are implemented, as well as the relationship between programme implementation and borrower ownership. In addition, the preceding arguments presented in the present thesis manage to provide some rudimentary correlation between governance structure and borrower ownership. Thus, the relationship between the BWIs

and the developing countries, governance structure being an important part o f that relationship, seems to have its implications on the effectiveness o f the SAPs in producing an impact. The following section will continue this discussion and examine the relationship between the BWIs and the developing countries and how this relationship have affected the effectiveness o f the legal and quasi-legal instruments employed in the SAPs to influence developing countries.

3.6 R elationship with the developing countries

From the preceding sections, this thesis has shown a significant correlation between the effectiveness o f the legal and quasi-legal instruments employed by the BWIs to influence the developing countries, and the relationship between the BWIs and their developing countries. On the one hand, these instruments, such as conditionality and programme and policy-based lending, because o f and/or despite o f their legal characteristics, have enabled the BWIs and their SAPs to gain certain leverage over the borrowing governments. That is to say, the borrowing governments have to seriously take into account conditions and policy recommendations prescribed in these instruments. This leverage has its implications on the effectiveness o f the SAPs by increasing their likelihood o f inducing changes in domestic laws and policies, ie o f producing an outcome.

On the other hand, the leverage that results in such effectiveness probably has, ironically, decrease the likelihood o f achieving the intended results o f the SAPs, ie o f producing an impact. To put this leverage o f these legal and quasi-legal instruments in the context o f governance structural o f the BWIs might help us to perceive the asymmetry problems in the BWIs more clearly. Decisions relating to the design and

approval o f these legal and quasi-legal instruments have been made under a governance structure long perceived by developing countries as unable to reflect their needs or importance in the world economy101. On the other hand, the costs and consequences o f these BWIs programmes fall mostly, if not exclusively, on the developing countries. Both o f these perceptions have affected the perception o f “fairness” o f the rules adopted under the BWIs from developing countries’ viewpoint, and rendered the voluntary compliance o f these rules difficult. Furthermore, these perceptions have also affected the relationship between the BWIs and their developing country members102, and had implications on factors influencing the degree o f programme ownership. It is, thus, understandable how the governance structure perceived as asymmetric by developing countries can affect “borrower ownership,” one o f the key elements required for successful programme implementation and result. Although the preceding section cannot provide direct empirical evidence to support such association between governance structure and the effectiveness in producing an impact, indirect evidence, reference to existing literature and rigorous analysis have nevertheless depict the possible correlation.

When the ideal model o f development was perceived as economic growth and industrialisation and was promoted by the BWIs through SAPs and the legal and quasi- legal instruments employed, the relationship between the BWIs and the developing countries has been anything but harmonious. As a consequence, the effectiveness o f the SAPs has been, on the one hand, observed in producing an outcome but, on the other hand, undermined in producing an impact. When sustainable development emerged as a

101 See, for example, Communique o f the Seventh Ministerial Meeting o f the G-24, 9-10 June 1974. 102 Calls for international monetary reform and a new international economic order, including the proposal to reform voting power and quota allocation in the Fund, have been expressed by developing countries since the 1970s (eg UN General Assembly Resolution 3347[XXIX], “Reform o f the international monetary system”, 1974; Resolution 3362[S-VII] “Development and international economic co-

new development paradigm and the World Bank began to embark on a new role in assisting the implementation o f MEAs in developing countries and establish innovative mechanisms as a response, the relationship between the Bank and its developing country members has undergone certain transformations. As the next chapter will demonstrate, GEF, one o f these innovative mechanisms, might have begun to adopt the legal and quasi-legal instruments employed by the BWIs in the SAPs, but in combination with their own novel governance structure different from that o f the BWIs. How will this new development affect the relationship between the World Bank and the developing countries and, in the process, affect the effectiveness o f these legal and quasi-legal instruments adopted to achieve a new objective are to be investigated in the next chapter.

operation”, 1975.) Nevertheless, as the governance structure o f the BWIs is concerned, these calls for reform have yet to be materialised two decades later.