Good Governance: Democracy and Conditional Economic Aid

Abstract

The 1980s were a decade of intensive experimentation with the use of policy-based lending to promote economic reforms. In the early 1990s many are calling for the use of aid to promote political reforms as well. In the United States there are calls for ‘political conditionality’ from both the Congress and the Executive Branch. Since mid-1989, high-level officials in the United Kingdom, France, Germany, Holland, and most recently Japan have announced that their aid programmes will give more weight to recipients’ observance of human rights and democracy. The World Bank is actively debating ways to improve ‘governance’ in client nations.