St Comp Int Dev (2016) 51:81102

DOI 10.1007/s12116-016-9217-7

International Organizations: Loose and Tight Coupling

in the Development Regime

Sarah Babb 1 & Nitsan Chorev 2

Published online: 15 April 2016

# Springer Science+Business Media New York 2016

Abstract In this essay, we explore how international organizations (IOs) have shaped
how economic development has been conceptualized, promoted, and practiced since
the end of World War II. We conceive of development as an international regime that
provides structure and coherence to an area in international relations. We argue that
over time, the international development regime has varied in how tightly coupled it
has beenthat is to say, in the degree to which it has been characterized by
interdependence, centralized authority, and standardization. IOs have played a leading
role in determining the tightness of coupling within the regime by selectively
channeling resources, enforcing policy rules, and disseminating norms and ideas.
We describe three distinct periods in the history of IOs in the international develop-
ment regime. In the first period, which lasted through the end of the 1970s, the UN
and its agencies specialized in diffusing norms and ideas, and the World Bank in
providing resources, but neither played a significant role in enforcing policy rules,
resulting in relatively loose coupling. The second period, which lasted until the early
2000s, was associated with the centralization of authority in the World Bank, closer
linkages between rules, resources, and ideas, and tighter coupling. Finally, we argue
that we are entering a more loosely coupled third period, characterized by the rise of
new actors, the decentralization and fragmentation of authority, and the declining
influence of policy paradigms.

* Nitsan Chorev
nitsan_chorev@brown.edu

Sarah Babb
sarah.babb@bc.edu

1
Department of Sociology, Boston College, Chestnut Hill, MA 02467, USA
2
Department of Sociology and Watson Institute for International and Public Affairs, Brown
University, Providence, RI 02912, USA
82 St Comp Int Dev (2016) 51:81102

Keywords International organizations . Development . International regimes . Loose

coupling . World Bank . United Nations

At the end of World War II, two international organizations were founded with a
mandate to promote economic development. Onethe United Nationspledged to
employ international machinery for the promotion of the economic and social ad-
vancement of all people (United Nations 1945). The otherthe International Bank for
Reconstruction and Development (IBRD, but commonly referred to as the World
Bank)was committed to supporting postwar reconstruction and to the encourage-
ment of the development of productive facilities and resources in less developed
countries (International Bank for Reconstruction and Development 1944).
Ever since then, the World Bank and United Nations, along with a growing list of other
international organizations (IOs), have played a critical role in determining how econom-
ic development has been conceptualized, promoted, and practiced. The purpose of this
article is to explore IOs role in the evolution of an international development regime. For
International Relations scholars, regimes are implicit or explicit principles, norms, rules
and decision-making procedures around which actors expectations converge in a given
area of international relations (Krasner 1982: 185). International regimes influence the
behavior of states and thereby provide both shape and coherence to an otherwise anarchic
international system (Haggard and Simmons 1987; Meyer et al. 1997).
In this article, we argue that regime coherence can vary significantly over time.
Drawing on a theory from organization studies, we describe the international develop-
ment regime as occupying a continuum from tight to loose coupling. Tightly coupled
systems are characterized by strong interdependence, centralized authority, and stan-
dardization; in contrast, in loosely coupled systems, actors retain identity and sepa-
ratenesstheir attachment may be circumscribed, infrequent, weak in its mutual
effects, unimportant, and/or slow to respond (Weick 1976: 3; Burke 2014). Whether
an international regime is more tightly or loosely coupled can have important conse-
quences: tighter coupling can create the conditions for greater coordination and con-
vergence toward a single policy model. In contrast, looser coupling creates potential for
greater policy heterogeneity or what some scholars refer to as policy space (Wade
2003; Shadlen 2005; Chang 2006; Gallagher 2008).
Since the founding of the contemporary development regime in the 1940s, IOs have
wielded three tools to influence the actions of governmentsand thereby to render the
regime more loosely or tightly coupled. First, IOs have provided funding and other
resources for some activities (and, by implication, not for others). For example, during
its earliest decades, the World Bank specialized in lending for large-scale infrastructure
projects, which encouraged borrowing governments to make these sorts of grand
investments (Hirschman 1967; Stern 1997: 532). Nowadays, the Global Fund to fight
AIDS, tuberculosis, and malaria is providing funds for countries around the world to
provide insecticide-treated mosquito nets and antiretroviral drugs for their populations.
Whether it is for bridges or bed nets, the earmarking of resources by IOs helps
determine what development activities governments choose to engage in.
Second, IOs have shaped the development regime by making and enforcing policy
rules (Keohane and Nye 1977; Krasner 1982). The World Trade Organization (WTO),
for example, oversees the making of rules in rounds of international negotiations and
St Comp Int Dev (2016) 51:81102 83

can wield the threat of third-party trade sanctions over governments that fail to comply
(Chorev 2007). Most IOs lack such coercive powers, and their ability to enforce rules
often depends instead on their ability to act as gatekeepers to resources (Chorev and
Babb 2009). For example, the International Monetary Fund (IMF) is famous for
providing loans to governments that promise to implement particular kinds of policies
(and suspending loans to governments that fail to comply) (Babb 2007).
Third and finally, IOs have influenced governments development policy choices by
disseminating norms and ideas (Meyer et al. 1997; Ruggie 1982). Norms and ideas are
often implicitly (or explicitly) attached to funded projects and suggested rules, since
these projects and rules are often selected exactly based on their compatibility with a
particular development vision. But norms and ideas can also be disseminated indepen-
dently of other sources of influence, thanks to some IOs expert authority (Barnett and
Finnemore 2004). For example, the World Bank employs thousands of economists, and
the ideas contained in its research publications are read and cited by development
experts, graduate students, and policymakers around the world (Stern 1997; Broad
2006). IOs may also disseminate normsboth cultural values and standards around
how things should be done (see Scott 1993: 37). IOs wield moral authority, based on
their claim to embody, serve, or protect some widely shared set of principles (Barnett
and Finnemore 2004: 23), and they can draw on this authority to persuade governments
to behave in particular ways. For example, the United Nations Millennium
Development Goals influences the foreign aid programs of wealthy governments
through appealing to shared values and setting moral standards. In addition, IOs
frequently disseminate normative best practicesfor example, through sending
technical assistance missions to member governments or through programs for training
government officials (Wallace 1990; Broome and Seabrooke 2015).
In our analysis, we describe three distinct periods in the history of IOs in the
international development regime: from the end of the World War II until roughly
the end of the 1970s; from the outbreak of the Third World debt crisis in the early
1980s through the mid-2000s; and from roughly the mid-2000s to the present. We
argue that the difference between the three periods can be traced to the distinct
forms of influence IOs can employ, as well as the interplay between these forms
of influence. In the first period, the UN and its agencies specialized in diffusing
norms and ideas, and the World Bank in providing resources, but neither played a
significant role in enforcing policy rules, resulting in relatively loosely coupled
regime. The second period, in contrast, was associated with centralization of
authority in the World Bank and an unprecedented tightening of the linkages
between rules, resources, and ideas. The Bank conditioned access to its resources
on following particular policy rules, which were upheld by other powerful
organizations in the regime, and organized around a core (yet evolving) set of
ideas about the appropriate means and ends of development policy: a develop-
ment policy paradigm, legitimated through the expert knowledge of economists
(Hall 1993). The result was a tightly coupled international development regime.
Finally, the third period represents a return to looser coupling, characterized by
the rise of new actors, the fragmentation and decentralization of authority, and the
declining influence of policy paradigms. In our conclusion, we return to organi-
zational theory to speculate on the consequences of this more loosely coupled
regime for development.
84 St Comp Int Dev (2016) 51:81102

Intergovernmental Organizations and Postwar Development

From the end of World War II until the 1980s, the policies of developing countries were
constrained by multiple factors, including declining terms of trade, the demands of
foreign investors, and the forces of Cold War politics (Evans 1979). Yet, these
constraining factors were diffuse and decentralized and lacked the organizing principle
of either a hegemonic idea or a coherent set of rules. Overall, international organiza-
tions did relatively little to constrain national development policies during this period,1
and neither of the two organizations that dominated the development regime at the
timethe UN and the World Bankplayed a significant role in making and enforcing
rules for development policy. Thus, this 40-year period was one of relatively loose
coupling in the international development regime.
The roles of these two organizations within the regime were quite different: while
the UN was central in disseminating norms and ideas, for decades, the World Bank
focused mostly on providing resources. To a large extent, these roles reflected the
organizations respective organizational structures (see also Chorev and Babb 2009;
Babb 2009; Chorev 2012). The UN and its agencies were financially dependent on
mandatory (weighted) member contributions, but their policies were controlled by
member governments through a one-country-one-vote system. The voting rule gave
greater weight to the preferences of the recently decolonized Third World, a term that
was coined in the 1950s. The heavy reliance on relatively small mandatory contribu-
tions, in turn, meant that UN agencies operated within distinct resource constraints and
were unable to provide the development resources that new member governments were
demanding with increasing insistence. From the start, then, the provision of resources
was essential for the work of UN agencies but also, necessarily, normally limited to
technical assistance programs (Jolly 2004). If the UN or its agencies were to be
influential, it was through normative and ideational means, and these norms and ideas
were partly shaped by the voice of the developing countries.
In contrast, the World Bank was founded with a shareholder system resembling that of
a private bank, designed to award greater influence to those who contributed more to its
capital base and to raise money on private financial markets. In line with the preferences of
the dominant power to emerge from World War II, the Bank was headquartered in
Washington, D.C., and it had voting structures that reflected the dominance of wealthy
shareholders, especially the USA. When the World Bank opened for business, the USA
controlled 37.2 % of the votes, which gave it a veto over any modification of the Banks
charter (Mason and Asher 1973: 30). The World Bank could count on more abundant
resources than the UN, but the Banks built-in need to respond to the concerns of financial
markets and powerful shareholder governments also tended to make the Bank less
responsive to developing countries demands compared to the UN.2

1
One exception was the IMF, which required developing-country borrowers facing currency crises to adhere
to fiscal and monetary policy rules in exchange for access to its stabilization funds. IMF programs lowered
economic growth and employment but were also short-term and left borrowers underlying development
strategies alone (Babb and Buira 2005).
2
The World Bank and IMF were officially part of the UN system and were in theory supposed to be
coordinated by the UNs Economic and Social Council (ECOSOC). In practice, however, ECOSOC was never
able to tap into the Bretton-Woods organizations resources, and the UN repeatedly criticized the Bank for its
insufficient lending to the underdeveloped world (Dasgupta 1998).
St Comp Int Dev (2016) 51:81102 85

Despite the strength of its finances, during its first 15 years of existence, the World
Bank had very limited impact on the international development regime, either through
its lending or its research and publications (Gavin and Rodrik 1995). The Banks
resources were at first channeled exclusively to European reconstruction, and although
by the end of the 1940s, World Bank loans were available also to underdeveloped
countries, in practice, few such governments could afford World Bank interest rates.
The Bank came to specialize in financing the kind of tangible, profitable infrastructure
projectssuch as ports, railroads, and hydroelectric damsthat inspired the confi-
dence of bond markets. At that time, the Bank was small, staffed mainly with bankers,
lawyers, and low-profile macroeconomists; much of its management was drawn from
Wall Street (Pincus and Winters 2002: 56; Kapur et al. 1997: 456, 1178). Consequently,
the Banks approach to development was pragmatic and theoretically unelaborated. As
one official history described the record of this early period, One willlook in vain in
the Bank files for any evidence of accepted theories of development or models of the
development process (Mason and Asher 1973: 458).
Rather, during these early postwar years, it was the UN and its agencies that became
leading intellectual actors in the development regime, gathering statistics and emitting
publications that espoused remedies to the problems of developing countries. These
were authored by a diverse array of world-famous economists, including Albert
Hirschman, Arthur Lewis, Gunnar Myrdal, and Walt Rostow (Jolly 2004). The UN
Economic Commission for Latin America (ECLA) became the intellectual home of
Latin American structuralism, notably associated with the ideas of Argentine economist
Ral Prebisch, who served as ECLAs Executive Director from 1950 until 1963.
Structuralists at ECLA accepted the dominant assumption of the time that the goal of
economic development was economic growth, but rejected the classical economic
prescriptions of free trade and comparative advantage. In this view, developing coun-
tries needed to stop specializing in primary commodities and industrialize through
shielding their domestic manufacturing sectors from foreign competition (Baer 1962).
Within the UN system overall, much attention was devoted to igniting the develop-
ment process, an emphasis which resonated with ideas fashionable at the time, such as
Rosenstein-Rodans big push and Rostows take-off. The implication of these
theories was that large amounts of capital were required to provide the initial impetus
for development, and the UN and its agencies became leading advocates for more
development aid on more concessional terms (Jolly 2004: 534). By the mid-1960s,
experts at the UN and its agencies were also arguing for such policies as a mixed
economy and land reform (Jolly 2004: 9091, 22223). These statist policy prescrip-
tions were enabled by the UNs swelling (often socialist or socialist-leaning) Third
World membership, but also by the broader intellectual climate at the height of the
Keynesian consensus (Hirschman 1981).
The 1960s was declared by the UN General Assembly to be the United Nations
development decade, with the goal of a minimum annual growth rate of 5 % in
aggregate national income of developing countries by the decades end. Since the UN
possessed limited resources to devote to this goal, the organization exercised its moral
authority by calling on wealthy countries to increase foreign aid and investment and to
guarantee fair prices for developing countries commodity exports. The UNs develop-
ment decade proposals for action also called on developing countries to engage in
development planning and to move into the production of industrialized exports (Jolly
86 St Comp Int Dev (2016) 51:81102

2004). By the end of the decade, however, it was clear from the UNs own metrics that
the results had been disappointing: the share of developing countries in world trade had
steadily declined, the income gap between the north and the south had failed to narrow,
and the growth that had occurred was notably failing to improve the lives of the poor
(Sauvant 1981; Doyle 1983).
This suggested that a new approach was needed, which led the development
thinking of the UN and its agencies in more radical directions. In 1964, developing
countries convened the United Nations Commission on Trade and Development
(UNCTAD), which was intended as a south-friendly alternative forum to the General
Agreement on Tariffs and Trade (GATT), which was considered to be dominated by the
north (Murphy 1984; Sanders 1991). UNCTAD, as well as other UN agencies and
commissions, argued that international economic rules were biased in favor of rich
countries, and they began to search for ways to compensate developing countries for
their subordinate economic position.
UNCTAD became the leading forum through which Third World nations
demanded an overhaul of the international economic system. The term New
International Economic Order (NIEO) was first used in a speech by UNCTAD
director Ral Prebisch (formerly of ECLA) in 1967 and soon demands for such
an order dominated discussions everywhere in the UN (UNCTAD 2014: 40;
Jolly 2004: 122). Drawing on anticolonial thought and dependency theory,
which saw underdevelopment as the result of past and present practices of
exploitation by wealthy-country governments and their multinational corpora-
tions, the NIEO included proposals for increased developing countries sover-
eignty over natural resources, control over foreign investment, commodity price
stabilization, increased development assistance and debt relief, and enhanced
developing-country influence in international organizations, including both the
World Bank and IMF (Jolly 2004: 1213). The NIEO also had a clear norma-
tive dimension: it invoked the history of colonialism to call on developed
countries to live up to a moral obligation to address northsouth inequalities.
Subsequently, UN agencies designed programs, formulated and called for na-
tional policies, and initiated international agreements (including codes of con-
duct intended to regulate the practices of multinational corporations) in line
with the principles of the NIEO (Murphy 1984: 131).
Not central to most NIEO discussions, but with great long-term effects, was a
reevaluation of how development should be defined. Until then, development had been
more or less universally definedby economists, as well as capitalist, communist, and
non-aligned governmentsby economic growth, to be achieved through industrializa-
tion. As it became clear that economic growth, even when achieved, did not necessarily
trickle down to the neediest members of societies, there was growing interest within the
UN with linking development to poverty and distribution. In the 1970s, the
International Labor Organization (ILO) developed a basic needs approach that
prioritized the provision of fundamental human needs (hence, concern with economic
distribution) over an abstract concern with economic growth. In this way, the ILO
redefined the direct objective of development to be satisfying the basic needs of the
entire population, including for primary consumption goods (food, clothing, shelter),
services (water, health, education, transport), and employment (Emmerij 2010; Imber
1989; Wells 1991: 8). It was soon used by other UN agencies as well: the World Health
St Comp Int Dev (2016) 51:81102 87

Organization (WHO), for instance, declared health a basic human need and called for
investment in basic health services and in essential medicines (Chorev 2012).
As UN development norms and ideas evolved, the World Bank was beginning to use
its resources to wield greater influence in the development regime. With US support,
the Bank added in 1960 the International Development Association (IDA), which
offered low-interest loans to poor countries that were unable to afford IBRD interest
rates.3 Over the following decade, the USA would support the establishment of two new
regional multilateral lenders: the Inter-American Development Bank (IDB) and Asian
Development Bank (ADB). The ADB was jointly dominated by the US and Japan,
while the IDB granted unusually strong representation to developing country members,
but both had weighted voting systems more like that of the World Bank than that of the
United Nations (Sanford 1982).
The addition of the IDA helped make the World Bank a bigger and more
development-focused organization. It expanded its lending portfolio from ports and
dams to projects that could potentially benefit the poor directly, in areas such as
agriculture, education, and urban sanitation. During Robert McNamaras tenure as
World Bank president (196881), the Bank adopted the alleviation of world poverty
as its motivating mission, and it became a more important intellectual actor in the
development regime. McNamara was particularly known for hiring more and higher-
profile economists and by launching the publication of the Banks World Development
Report (Pincus and Winters 2002; Stern 1997; Broad 2006). By the mid-1970s, the
World Bank was posing a serious challenge to the UNs intellectual dominance (Kapur
et al. 1997: 1193). Yet, McNamaras World Bank was intellectually quite diverse rather
than unified, with some Bank economists being critical of statist policies in developing
countries (Streeten 1979: 29), while others emphasized poor countries need for more
generous development aid and even redistribution within countries to address inequal-
ity (Kapur et al. 1997: 413; Lal 2004: 24). Meanwhile, there was something of a
disconnect between World Bank discourse, which often emphasized the importance of
combating poverty, and World Bank lending operations, which remained mostly
focused on traditional infrastructure projects (Stern 1997: 528; Kapur et al. 1997: 331).
The expansion of World Bank lending to low-income countries through the IDA
also expanded the reach of its policy advice. UN-specialized agencies were more
experienced and arguably better qualified than the World Bank to make policy
recommendations to developing country governments. Over time, however, UN
agencies found themselves at a disadvantage with respect to the Bank, which was
able to reward compliant governments with significant financial resources. As World
Bank historians Mason and Asher (1973) observed, Unesco (sic) had been providing
sensible advice on educational planning for years before the Bank entered the regime of
educational lendingBut there was a notable increase in attention given to educational
planning when it became clear that projects fitting into a sensible program of educa-
tional development had some chance of being financed (p. 426). The Banks practice
of using its resources to persuade governments to adopt particular policies came to be
known as policy leverage. Yet during this period, the World Banks leverage tended
to be subtle and to be limited to policies directly relevant to the projects it financed

3
Already in 1956, the USA had led efforts to expand the World Bank to include a new arm, the International
Finance Corporation (IFC), to specialize in lending to private firms in developing countries.
88 St Comp Int Dev (2016) 51:81102

(Mason and Asher 1973: 33134, 42627, 42021). The Banks ability to ask for
broader policy changes at this time was heavily circumscribed both by its articles of
agreement and by the Cold War, which meant that geopolitical alignment could trump
policy considerations in determining who got loans and under what conditions (Woods
2006: 33; George and Sabelli 1994: 155). In the 1970s, the Banks power to exert
leverage was further subverted by the glut of petrodollars in the international financial
system, which meant that developing country governments could substitute World
Bank loans with private bank loans on easier terms (Kapur et al. 1997: 321).
Significantly, although the World Bank possessed greater financial resources to back
up its advice, it seemed often to follow UN agencies intellectual leadfor example, by
adopting education policies developed by UNESCO (Kapur et al. 1997: 191; Jones
1992: 12327). The Bank also followed the lead of the ILO in promoting a basic
needs approach. From 1976 till the early 1980s, the Bank carried out country and
sectoral studies on basic needs; estimated the global cost of meeting basic needs; and in
other ways calculated and debated the usefulness of that concept. Proposals based on
the basic needs approach still had to be justified in terms of cost and economic return,
which proved difficult when majority opinion [at the Bank] was at best agonistic on
the productivity of spending on education and health. Consequently, large-scale basic
needs lending programs were eventually never endorsed (Kapur et al. 1997: 26567).
Nevertheless, the fact that the Bank seriously considered this approach suggests that as
late as the 1970s, the UN was exercising considerable normative and ideational
leadership within the development regime.

The Rise of the Washington Consensus

In the 1970s, developing-country governments had used the United Nations to call for a
New International Economic Ordera more equitable international regime of generous
development resources and relatively few rules to constrain developing-country poli-
cies and more rules to constrain developed countries and multinational corporations.
Little more than a decade later, however, a very different order had arisen. Under the
US-led Washington Consensus (Williamson 1990), bailout and development funds
were granted to heavily indebted developing-country governments only if they com-
mitted to market-liberalizing policy reforms, overseen by the World Bank and the IMF.
The UN and its agencies lost their intellectual leadership and became increasingly
informed by the norms and ideas disseminated by the World Bank. In this more tightly
coupled international development regime, development authority became more cen-
tralized in the Washington-based international financial institutions, and the same
policy rules for developing countries were upheld by multiple organizations. Rules,
resources, and ideas were bound together into a mutually reinforcing package.
At the beginning of the 1980s, the bargaining power of developing countries was in
decline. The recently-elected Thatcher and Reagan administrations trumpeted the
virtues of free markets and supply-side economics and espoused a more militaristic,
less diplomatic, strategy for conducting the Cold Warone that was less tolerant of
Third World demands for social justice (Babb 2009: 7279). The outbreak of the Third
World debt crisis meant that governments that had only recently been arguing for a new
international order were forced into the arms of the IMF and the World Bank (Nelson
St Comp Int Dev (2016) 51:81102 89

1990; Haggard and Kaufman 1992), both of which assumed a vigorous new role in the
policies of developing countries.
The Program of Sustained Growth, which was launched by the US Treasury
Secretary James Baker in 1985, proposed the IMF, World Bank, and regional devel-
opment banks engage in coordinated structural adjustment lending aimed at market-
liberalizing policy reforms. These reforms included the privatization of state-owned
industries, the lifting of trade barriers, and removal of regulations. These elements were
at the core of a longer list of rules for developing countries that were being upheld by
international financial institutions and US bilateral aid agencies, which came to be
known as the Washington Consensus (Williamson 1990; Babb 2013).
The Washington Consensus was associated with a major expansion in international
financial organizations use of their policy leverageenforcing policy rules through the
selective channeling of resources. The World Bank devoted a much greater proportion
of its resources to lending in exchange for the promise of economic policy reforms
(Babb 2009). The IMF had been engaging in this sort of policy leveragewhich it
referred to as conditionalitysince the 1950s, but had in the past focused exclusively
on macroeconomic conditions (e.g., raising interest rates and cutting government
spending) directly linked to currency stability. In contrast, starting in the 1980s, the
IMF became, for all intents and purposes, a development institution that required its
borrowers to engage in structural reforms, such as privatizing state-owned industries
and lifting trade barriers (Babb and Buira 2005). Compliance with these reforms was
further encouraged by a closer relationship between the IMF and World Bank, and later
between the World Bank and regional development banks, which harmonized and
upheld one anothers conditions (Dell 1988; Babb 2009: 13941). In the World Bank
and regional development banks, policy leverage was also implemented through greater
selectivitythe awarding of project loans to countries that were demonstrably
compliant with Washington Consensus policies (Lewis 1993; Dollar and Levin 2004;
Leo 2010).
Under this new regime, developing countries were expected to lift trade barriers and
open their economies to foreign investment. This facilitated the rise of a new intergov-
ernmental organization, the World Trade Organization (WTO), in 1995. Compared to
its predecessor, GATT, the WTO imposed much greater constraints on development
policy space (Wade 2003; Shadlen 2005; Chang 2006; Chorev 2007; Gallagher 2008).
The WTO introduced issues, such as intellectual property protection, that were only
loosely related to the core concerns of trade policies, required developing countries to
accept all the obligations of a given round of negotiations, and introduced much
strengthened judicial proceedings designed to better enforce countries obligations
(Chorev 2007; Hopewell 2015). The strengthening of the international trade regime
made it increasingly difficult to have any industrial policy that provided preferences to
local producers or that imposed conditions on foreign investment.
The set of policy practices imposed by the Washington Consensus was linked to a
powerful and coherent set of policy ideas, legitimated through the expert authority of
economistswhat Hall (1993) calls a policy paradigm. It was enabled by the shift of
mainstream economics away from postwar Keynesianism and toward neoclassical
principlesan intellectual climate that favored stability-oriented, market-oriented,
and outward-oriented policies (Williamson 1994: 565). It was in this climate that the
World Bank emerged as the worlds most influential authority on economic
90 St Comp Int Dev (2016) 51:81102

development, acknowledged as such by supporters and critics alike (George and Sabelli
1994; Ranis 1997; Stern 1997; Broad 2006). In the 1980s, World Bank research
narrowed its focus to emphasize the defects of states and the virtues of markets and
to de-emphasize the goal of poverty reduction (Kapur et al. 1997: 119394). Although
the scope of World Bank research broadened once again in the decades that followed,
the Bank nevertheless became known for its skilled paradigm maintenance (Wade
1996, 2002; Broad 2006). Although its development policy ideas still usually originat-
ed elsewhere (Gavin and Rodrik 1995), the Bank had tremendous power to curate and
selectively amplify ideasnot only through its widely disseminated publications, but
also by translating them into practice through applying policy leverage. There was a
much tighter connection than had ever existed previously between the policy rules
attached to World Bank loans, on the one hand, and the ideas propagated in World
Bank research, on the other.
The policy paradigm of the Washington Consensus promised economic growth to
governments that opened their economies to international markets and foreign invest-
ment. When the promised growth failed to materialize, particularly among countries
that appeared to have followed Washingtons advice, the model became a target for
criticism, and the consensus began to evolve. The mainstream view that emerged in and
around the Bank and the fund was that the consensus had been essentially correct, but it
had paid insufficient attention to governance, or the institutional frameworks that
allow markets to function, such as laws and judicial systems. Another addition to the
original consensus was establishing and strengthening social safety nets and reducing
poverty. In this way, the Washington Consensus soon evolved into the augmented
Washington Consensus or second generation reforms (see Fine 2001; Kuczynski
and Williamson 2003; Stiglitz 2008). Importantly, the transition from consensus to
augmented consensus did not imply a relaxing of rules or an opening for development
policy space. On the contrary, the list of reforms required by the international financial
institutions (IFIs) became steadily longer and more constrainingincluding not only
market liberalizing reforms, but also institutional reforms (such as bankruptcy law
revision), and pro-poor policies, such as earmarking government spending for social
programs (Naim 2000: 506; Babb and Buira 2005). With the end of the Cold War,
international financial institutions could be less shy about explicitly using their re-
sources to leverage sensitive and potentially political policy reforms (Dollar and Levin
2004).
As the Washington Consensus rose and evolved, some UN agencies sounded a more
cautious note about the wisdom of rapid market-liberalizing reforms (see Jolly 1991;
Banerji 1999; Jolly 2010: 5). For example, in 1987 UNICEF published Adjustment with
a Human Face, which showed that World Bank and IMF programs had been harmful to
children and the poor in developing countries (Cornia et al. 1987). However, their
influence was limited. Even before the 1980s, it had been clear to observers that the
World Bank had the advantage of being able to couple its advice with significant
resources. Now that policy leverage was at its apogee, the difference between the rich
IFIs and the poor UN agencies was even starker. As one UN historian puts it,
[international financial] institutions and Western countries controlled the bulk of the
resources needed for programs of reform and transformationthe UN generally could
at best provide technical assistance (Jolly 2004: 158). The UNs reach was further
restricted by diminished funding. Republicans in the US Congress, who were hostile to
St Comp Int Dev (2016) 51:81102 91

the UN, managed to both reduce the relative contribution of the USA to the UN and to
reduce the overall growth in UN budget.
Some UN agencies adapted to these new circumstances by shaping their agendas to
better suit the expectations of Western countries, particularly the USA, and the World
Bank. The ILO, for example, began to focus on a small number (core) of the labor
standards they had previously developed and the least controversial from among them
(Standing 2008). UNICEF, in turn, followed the World Banks position in support of
user fees for health services (Jolly 1991; Banerji 1999). The WHO abandoned its
Health for All by the Year 2000 program that the organization had developed in the
1970s and adopted both discourse and programs more compatible with the principles
embodied in the Washington Consensus, including the measuring of the burden of
disease according to a World Banks formula, the employment of cost-effective logic in
evaluating programs, and more generally thinking of health in economic terms
(Chorev 2012).
Yet within the constraints in which they had to function, UN agencies continued to
develop and disseminate their own policies and programs in the shadow of the
Washington Consensus. For example, in the 1990s, the WHO was instrumental in
fighting for developing country access to affordable medicines, against the position of
the World Bank and the WTO, both of which supported the strengthening of intellectual
property rights. The WHO was also instrumental in challenging the World Banks
prioritization of economic growth and support of budget cuts by providing (economic)
evidence suggesting that investment in health is one of the most efficient ways to bring
about economic growth (Chorev 2012).

The Loosening of the Development Regime

For over half a century the international development regime was dominated by a
small number of well-established intergovernmental organizations. Over time, their
activities evolved, and the balance of power among them shifted, but the cast of
characters remained more or less the same. In just the past decade or two, however,
the regime has again been changing in unexpected ways. First, new actors have
emerged that challenged existing organizations to decentralize authority within the
regime and to provide developing country governments with an alternative to
following Washington Consensus rules. Second, a new intellectual logic is challeng-
ing established ways of thinking about development. International development
organizations have increasingly abandoned grand development paradigms in favor
of microlevel, evidence-based development interventions. Like its post-World War II
predecessor, todays development regime is more loosely coupled than it was during
the Washington Consensus period. Yet, todays development regime also has some
unique features that distinguish it from the loose coupling of the past. For one thing,
it appears to be more multipolar, dynamic, and complex than at any previous time in
history, and for another, it has been associated with a notable and perhaps unprec-
edented sidelining of economic theories and policy paradigms. Along with the
dwindling of the ability of Washington-based international financial institutions to
make and enforce rules associated with economic ideas; the very role of such ideas
is becoming more circumscribed.
92 St Comp Int Dev (2016) 51:81102

The Rise of New Players and the Loosening of Rules

Over the past decade, the international development regime has become notably more
crowded, with a host of new actors and new types of organizations entering the arena
including non-state actors, newly empowered states, andmost recentlynew and
potentially influential multilateral governmental organizations. This has altered the
authority structure of the regime, rendering it more complex and multipolar, and
loosening the impact of rules upheld by the World Bank, IMF, and traditional bilateral
donor states.
Much more than in the past, non-state actors have come to assume influential
positions in the development regime. Since the 1980s, non-governmental organizations
(NGOs) have allowed greater input in both World Bank and UN deliberations, adopting
a functionmonitoring and responding to the activities of international development
organizationsthat was previously assumed to be the job of member states (Risse-
Kappen 1995; Babb 2009: 190203). NGOs have also come to assume state-like duties
in the implementation of development projectswith World Bank, multilateral devel-
opment banks, and bilateral donors all channeling development financing through
NGOs (Edwards and Hulme 1996: 961; Dietrich 2013; see also Banks et al. 2015).
There has also been a steady increase in private development financing that has an
explicit public interest mission, including philanthropic and institutional donors (e.g.,
the Bill and Melinda Gates Foundation, the Clinton Foundation) and social impact
investment firms, which provide support to social enterprises (Greenhill et al. 2013;
Birn 2014). This triggered the emergence of a new organizational form: publicprivate
partnerships (PPPs), in which donor governments and international organizations
partner with private foundations to pursue particular development objectives.
Prominent examples include the UN Global Compact, the Global Environment
Facility (GEF), the Financing Facility for Remittances, the Vaccine Alliance (GAVI),
Education For All, and the Global Partnership on Output-Based Aid (GPOBA). Within
some development issue areassuch as global healthNGOs and PPPs have become
omnipresent and highly influential. It remains to be seen whether these organizations
will ultimately complement or threaten the authority of traditional development
organizations.
Meanwhile, more tangible changes to the authority structure of the development
regime have occurred along with shifts in the international balance of power. During
the 2000s, the BRICS countries (Brazil, Russia, India, China, and South Africa), as
well as governments of other middle-income and rapidly growing economies, presented
a powerful challenge to the dominance of the World Bank and IMF in the development
regime. These governments were empowered by their rapidly increasing share in the
global economy and (most clearly in the case of China) the visible economic success
they enjoyed in spite of their deviations from the Washington Consensus (Mortimore
et al. 2010; Ban and Blyth 2013; Ferchen 2013). The BRICS and their allies have been
eroding the influence of Washington-based IFIs in three ways: by turning to alternative
sources of financing; by providing bilateral development aid that allows other govern-
ments to avoid IFI policy leverage; and by seeking greater influence in the international
arena.
A key turning point was the Asian Financial Crisis of the late 1990s. In the wake of
this event, many critics charged that the IMF, in collaboration with the US Treasury,
St Comp Int Dev (2016) 51:81102 93

had not only created the conditions for the crisis by pressing for financial liberalization,
but actually exacerbated it through subsequent actions (Blustein 2001; Stiglitz 2002;
Weisbrot 2007). This taught an important lesson to middle-income governments,
especially those of East Asia, which began to accumulate and pool their hard currency
reserves, thereby eliminating the need to turn to the IMF (Buira 2005; Bello and Guttal
2005; Grabel 2015). These governments also began to use their growing access to
private international capital markets to avoid the conditions associated with World
Bank development loans (Birdsall 2006). As one World Bank report noted in 2009,
middle-income borrowers had become increasingly selective about the [policy-condi-
tional lending] areas in which they invite Bank engagement (World Bank 2009: 16).
Middle-income governments also began to scale up their own foreign aid to poorer
countries, leading to a steady increase in SouthSouth development cooperation,
with China as the leading donor (Zimmermann and Smith 2011). Bilateral development
aidthat is to say, non-military resources given from one government to anotherhad
always surpassed aid from multilateral organizations in volume, particularly at the
height of the Cold War (Lancaster 2007: 43). However, SouthSouth aid has a number
of characteristics that set it apart from the aid currently provided by the traditional
donors of the OECD Development Assistance Committee (DAC). One important
difference is that whereas DAC donors often harmonize their aid with IFI conditions,
SouthSouth aid has no such stipulations (Woods 2008).
The availability of resources through alternative institutions has weakened the ability of
the World Bank, but also other international organizations, to use resources as a means of
influence. Countries in need of external funds seem to now have options that make the
conditions attached to IMF or World Bank loans particularly unattractive. This kind of aid
allows recipient governments potentially to avoid not only market-liberalizing condition-
alities, but also the accretion of governance, pro-poor, environmental, safety, and human
rights stipulations that have increasingly come to encumber World Bank and Western
bilateral aid programs (Dreher et al. 2011). Indeed, a characteristic feature of SouthSouth
development aid is that it is allegedly not aimed at diffusing policy norms and ideas at all.
Couched in the principles of economic sovereignty, non-interference, and mutual eco-
nomic benefit, Chinese and other SouthSouth aid is often used to pursue diplomatic and
humanitarian goals but is most famous for emphasizing pragmatic, commercial ends.
Recipient governments get loans for much-needed infrastructure, and donor governments
gain preferential access to markets and natural resources, as well as lucrative procurement
contracts for their firms (Woods 2006; Walz and Ramachandran 2011; Zimmermann and
Smith 2011; Greenhill et al. 2013; Stallings and Kim, The Political Economy of East Asian
Foreign Aid, unpublished). Such commercial considerations have always played a role in
bilateral and multilateral development aid, and the new models emphasis on infrastructure
and direct benefit to donor-country business interests is strongly reminiscent of Japans
foreign aid program until the 1980s (see Lancaster 2007; Stallings and Kim, The Political
Economy of East Asian Foreign Aid, unpublished). The significance of SouthSouth aid
lies not in its novelty but in its potentially game-changing erosion of the influence of
dominant international organizations.
At the same time, BRICS and other countries have not abandoned the international
arena. One of the enduring lessons of the Washington Consensus was the particular
importance of those international organizations that could make as well as enforce
global economic rules. Therefore, unlike the Third World governments of the earlier
94 St Comp Int Dev (2016) 51:81102

NIEO, the BRICS have not relied on the United Nations as a forum. Rather, they have
used the newly established intergovernmental Group of 20 (G-20) to coordinate
demands that focused on organizations such as the WTOwhere BRICS governments
used their growing market share as leverage (Gallagher 2008; Hopewell 2015)and
the IMF and World Bank, to which they were making increasingly large contributions
(Wade 2011; Dossani 2014).
The IMF and the World Bank proved difficult to transform, however. The BRICS
governments only had limited success in achieving changes to the voting structures
of these two organizations (Vestergaard and Wade 2013, 2015). At the WTO, in
turn, India, China, and Brazil were more effective in blocking US demands than
pursuing their own interests (Hopewell 2015). Unable to gain the desired degree of
influence in the traditional international organizations, and in the face of an
enormous unmet demand for development financing, China and other developing-
country governments have recently established the BRICS New Development Bank
(NDB) and the Asian International Infrastructure Bank (AIIB). The voting struc-
tures of these new banks will be dominated by emerging-market shareholders:
whereas the BRICS as a group will control decision-making at the NDB, the
AIIB will be dominated by China (Humphrey 2015). The NDB was founded
alongside a reserve-pooling arrangement, presumably to help members manage
their currencies without turning to the IMF (Government of Brazil 2015). Like
the southern bilateral donors described above, the NDB and AIIB will pursue a
mission focused on lending for infrastructure projects. Although it is still unclear
precisely how these organizations will function and how important they will be;
their founding is the latest evidence of growing multipolarity in the development
regime. If current trends continue, it will become steadily more difficult for
traditional IFIs and Western donors to use their resources to enforce rules for
developing-country policies. Over the long run, this loosening of transnational rules
might even erode the World Banks longstanding dominance over development
norms and ideas. World Bank ideas seem bound to become less compelling, to
the extent that paying attention to these ideas is no longer a prerequisite for
governments to access development resources.

From Paradigms to Best Practices and Measurable Results

During the Washington Consensus era, the development regime was organized around
grand theories about development policy and an evolving policy paradigm prescribing
the proper ends and means of development (Hall 1993). Today, in contrast, there is
much greater concern with the effectiveness of development policy, manifested in a
focus on performance-based management or measurable results that requires
agencies to identify indicators of development success and measure their progress
toward those goals. Many development programs have experienced the growing push
for and reliance upon specific kinds of quantitative metrics that make use of evidence-
based statistical measures, experimental research platforms, and cost-effectiveness
rubrics (Adams 2016).
The embrace of measurable results was triggered by the increased popularity of
New Public Management theories among wealthy donor governments. The Clinton
and George W. Bush administrations urged the World Bank and regional development
St Comp Int Dev (2016) 51:81102 95

banks to reward good behavior by providing more resources to governments that had
adopted measurably sound policies and incorporated measurable results through the
new US bilateral aid program, the Millennium Challenge Account (Babb 2009: 221
22). Private development funders, such as the Gates Foundation, similarly embraced
the measurable result trend, which promised to ensure that their donations would be
channeled to greatest possible effect. Measurement and performance were also central
to the activities of NGOs and PPPs, which could no longer assess their actions by the
amount of funds they spent, for example, but were instead asked to assess the number
of lives affected by their actions. Consequently, the Global Fund, GAVI, GPOBA, and
other PPPs became greatly concerned with identifying and implementing best practices,
including those based on randomized trials (Adams 2016).
With development organizations increasingly emphasizing measurable results, there
was a flourishing of a new type of development researchone that focused on creating,
deploying, and evaluating indicators of success, particularly in the area of social policy.
A notable example is the Poverty Action Lab at MIT, an organization that partners with
US government agencies, NGOs, private foundations, and multilateral organizations
such as the World Bank. The Lab specializes in conducting systematic, randomized
evaluations of the effectiveness of particular policies on measurable development
outcomesfrom the impact of girls scholarships on exam scores in Kenya to the
impact of deposit collection services on personal savings in the Philippines (Abdul
Latif Poverty Action Lab 2015).
In the new world of international development aid, randomized experiments and
their related forms of evidence-based practice have become the new arbiters of what
counts (Adams 2016). Indeed, the infamous Millennium Villages Project (MVP)a
huge undertaking involving massive aid expenditures for 14 villages in rural sub-
Saharan Africawas criticized exactly for having a design that made it impossible
to carry out a truly rigorous assessment of the projects effects (Clemens and
Demombynes 2010). Development interventions are therefore expected to be
organized around two kinds of activities, not only delivering the service in
question, but also producing usable and reliable datasets that can be used for
scaling-up (Adams 2016). For example, a WHO report on Developing WHO
Guidelines with Pragmatic, Structured, Evidence-based Processes noted that the best
type of evidence on which to base recommendations should have at least one random-
ized controlled trial with clinical endpoints, or several relevant high quality clinical
studies (Adams 2016).
Whether or not randomized experiments and measurable results are indeed the best
tool for identifying best practices, what is of interest to us here is their implications for
the development imagination of international organizations. In the past, both the UN
and the World Bank were motivated by grand, at times all-encompassing truisms
regarding development and how to achieve it. Such visions inspired not only the
Washington Consensusa hegemonic policy paradigm incentivized by rules and
resourcesbut also to varying degrees the NIEO of the 1970s, the development decade
proposals for action of the 1960s, and the postwar Latin American structuralism that
emanated from the ECLA. In contrast, the new development regime seems to be based
on a theoretical agnosticism, which focuses on what works to achieve very specific
goals, such as identifying and deploying the most effective means for decreasing
mortality from malaria.
96 St Comp Int Dev (2016) 51:81102

This move away from grand development paradigms has enabled the UN and its
agencies, which had been marginalized during the Washington Consensus period, to
carve out a new role. The UN today is vocal and explicit in its attempt to exert moral
influence on its member states. If the Human Development Index (HDI) is the
intellectual manifestation of this shift, the Millennium Development Goals (MDGs)
and the Sustainable Development Goals (SDGs) should be seen as the programmatic
manifestation of the same shift. Both clearly echo the UNs concern with basic needs
back in the 1970s (Emmerij 2010), but with a nod to the shift away from paradigms to
measurable results.
Housed at the UNDP, the HDI was created to emphasize that people and their
capabilities should be the ultimate criteria for assessing the development of a country,
not economic growth alone.4 The Index contains measures of average achievement in
three key dimensions of human development: a long and healthy life, being knowl-
edgeable, and have a decent standard of living. Notably, the human development
approachwhich was inspired by the Nobel laureate Amartya Sens work on human
capabilitieswas developed by the Pakistani economist Mahbub Ul Haq, who had
been involved in the development of the basic needs approach at the World Bank in
the 1970s.
The HDI represented an intellectual challenge to the fetishization of economic
growth that had long dominated the development regime, but also indirectly enabled
an institutional challenge to the dominance of the World Bank, with the UN and its
agencies regaining their influence by calling for greater attention to human well-being
over narrow economic measures. In launching the MDGs in 2000, the UN was able to
draw on the new HDI foundation to make programmatic claims. Signed by leaders of
189 countries in 2000, the UN Millennium Declaration contained 8 development goals
that all UN member states, and many international organizations, committed to help
achieve. Those goals were to eradicate extreme hunger and poverty; to achieve
universal primary education; to promote gender equality and empower women; to
reduce child mortality; to improve maternal health; to combat HIV/AIDS, malaria,
and other diseases; to ensure environmental sustainability; and to develop a global
partnership for development. Established in 2015 to replace the MDGs, the SDGs
reiterate previous goals but add new ones, such as access to water and sanitation and
energy; interestingly, the new SDGs also include economic goals such as promoting
inclusive and sustainable economic growth and reducing inequality. There was a
clear overlap between the dimensions used by the HDI to measure development and the
choice of goals, especially in the MDGs.
These goals have been framed in terms of specific targets and dates (for example,
Halve, between 1990 and 2015, the proportion of people whose income is less than
$1.25 a day), a reflection of todays emphasis on measurable results. Yet given the
scant resources available to the UN, neither the MDGs nor the SDGs have been
accompanied by the funds necessary to achieve them. Rather, just as in the develop-
ment decade of the 1960s, the UN has drawn on its moral authority to persuade
wealthy-country governments, as well as better-resourced international organizations
such as the World Bank, to provide the resources necessary to meet these goals, through
such means as bilateral aid programs and debt cancelation. The MDGs and SDGs are

4
http://hdr.undp.org/en/content/human-development-index-hdi. Accessed 1 Oct 2015.
St Comp Int Dev (2016) 51:81102 97

based on a particular conception of development (as epitomized by the HDI), but offer
neither resources nor rules for development policy. Moreover, these development goals
do not grow out of a particular development theory, and they are not attached to a clear
formula on how to achieve them (for example, through more or less state intervention
or market practices). They are stated as moral imperatives rather than clear roadmaps.
Today, in short, the norms and ideas motivating international development organi-
zations appear to be shrinking in scale and scope. They are not conducive to devising
the next development policy paradigm. As Rodrik (2009) observes, The emerging
consensus revolves not around a specific list of policies, but around how one does
development policy (p. 24). Interventions based on regime experiments canwhen
the evidence supports itbe scaled up, but they cannot be scaled across. For
methodological purists, even the best evidence to support the free distribution of
insecticide-impregnated bed nets, for example, cannot be directly applied to the free
distribution of any other commodity. These modest ambitions are well adapted to
todays fragmented, multipolar development regime, in which powerful international
organizations such as the World Bank are seeing the decline of their ability to diffuse
grand development ideas through conditionality.

Conclusion

In this essay, we have broadly outlined 70 years of the history of IOs in

development policy and showed how IOs involvement in this domain has varied
tremendously over time. We showed that during the postwar period, both the UN
and the World Bank were involved in development, but in two very different
ways. While the UN established an intellectual agenda, the World Bank devoted
resources to projects that were not explicitly linked to any particular intellectual
paradigm. As a result, this era was characterized by a relative absence of rules and
a diversity of norms and ideas. By the 1980s, however, the World Bank had
become the regimes dominant player and used resources to disseminate a more
narrowly defined, intellectually grounded set of rules for development policy. It is
only recently that the UN has found a voice again. While it is more normative
than intellectual and is not backed by resources, it still has considerable influence
on the way development is treated at the international level. But, the international
arena has recently become crowded by new actors and organizations. This new
phase is characterized by a greater choice over sources of development financing, a
looser grip of IO rules, and preference for empirically validated microinterventions
over grand policy paradigms.
Thus, the international development regime appears to have returned to a more
loosely coupled state. What difference does this make? Organizational theorists suggest
that loosely coupled systems have both benefits and drawbacks. Because they are more
chaotic and decentralized, such systems are difficult to control and coordinate and do
not lend themselves to standardized solutions (Orton and Weick 1990; Weick 1976;
Warner 2014). Sometimes centralized coordination and standardization can be desir-
able. For example, one of the criticisms of Chinese foreign aid is that it enables
developing-country governments to avoid environmental and other arguably essential
standards (Nam 2007).
98 St Comp Int Dev (2016) 51:81102

On the other side of the ledger, however, loosely coupled systems tend to be insulated
from centrally coordinated failures, such as the IMFs widely criticized handling of the
Asian Financial Crisis (Radelet and Sachs 1998; Blustein 2001; Stiglitz 2002). They are
also prone to producing mutations and novel solutions (Weick 1976: 7). Some
mutations may be disastrous, but others may succeed and allow local actors in the
Global South to adapt more effectively to changing environments. For example, Chang
(2006) has argued that the successful development strategies of todays Asian Tigers
were nurtured by the enabling development policy space that prevailed during the post-
World War II decades.
Current conditions seem similarly favorable to development policy experimenta-
tion. Indeed, they may be even more favorable. Compared to the loose coupling of the
postwar decades, todays development regime is a more fractured topology
(Beckfield 2010). It is far more complex, with a much more heterogeneous array of
actors, than the one that arose in the postwar decades. The current era, at least for
now, also offers more (and more diverse) development resources than were available
in the postwar period (see Zimmermann and Smith 2011). Future research, we hope,
will allow us to understand the multifaceted local consequences of this new loosely
coupled era.

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Sarah Babb is a Professor of Sociology at Boston College. She is author of Managing Mexico: Economists
from Nationalism to Neoliberalism (Princeton 2001) and Behind the Development Banks: Washington
Politics, World Development and the Wealth of Nations (University of Chicago 2009).

Nitsan Chorev is the Harmon Family Professor of Sociology and International and Public Affairs at Brown
University. She is the author of Remaking U.S. Trade Policy: From Protectionism to Globalization (Cornell
2007) and The World Health Organization Between North and South (Cornell 2012).
Studies in Comparative International Development is a copyright of Springer, 2016. All
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