microeconomic goals, such as privatization, improvements
in the efficiency of public service provision, and perhaps
also suggestions as to how to improve the functioning of
the state itself by emphasizing anticorruption measures.
Though on their own many of these reforms might be
sensible, the approach of international organizations in
Washington, London, Paris, and elsewhere is still steeped
in an incorrect perspective that fails to recognize the role of
political institutions and the constraints they place on
policymaking. Attempts by international institutions to
engineer economic growth by hectoring poor countries into
adopting better policies and institutions are not successful
because they do not take place in the context of an
explanation of why bad policies and institutions are there in
the first place, except that the leaders of poor countries are
ignorant. The consequence is that the policies are not
adopted and not implemented, or are implemented in
name only.
For example, many economies around the world
ostensibly implementing such reforms, most notably in Latin
America, stagnated throughout the 1980s and ’90s. In
reality, such reforms were foisted upon these countries in
contexts where politics went on as usual. Hence, even when
reforms were adopted, their intent was subverted, or
politicians used other ways to blunt their impact. All this is
illustrated by the “implementation” of one of the key
recommendations of international institutions aimed at
achieving macroeconomic stability, central bank
independence. This recommendation either was
implemented in theory but not in practice or was
undermined by the use of other policy instruments. It was
quite sensible in principle. Many politicians around the
world were spending more than they were raising in tax
revenue and were then forcing their central banks to make
up the difference by printing money. The resulting inflation
was creating instability and uncertainty. The theory was that
independent central banks, just like the Bundesbank in
Germany, would resist political pressure and put a lid on
inflation. Zimbabwe’s president Mugabe decided to heed
international advice; he declared the Zimbabwean central
bank independent in 1995. Before this, the inflation rate in
Zimbabwe was hovering around 20 percent. By 2002 it had