17 A recent review of IMF conditions in adjustment operations found that as many as 65 percent of the conditions were implemented. Nestmann and Weder (2002). A review of the Millenium Challenge Corporation suggested that recipients implemented more ‘sound’ policies than they would have done otherwise, but there was no corresponding rise in the growth rate (Johnson and Zajonc, 2006). 18 Easterly (2002). He notes the 30 IMF and World Bank adjustment loans to Argentina over 1980-99 and the 26 adjustment loans to Cote d'Ivoire and Ghana in particular. This is only one in a long line of studies to come to a similar conclusion. Indeed, Przeworski and Vreeland (2000) argue that participation in IMF programs has a short term negative effect. On leaving they grow faster, but not as fast as they would have done without entering in the first place. See also the review of studies in Butkiewicz and Yanikkaya (2005) and their own results which suggest IMF lending slows growth and reduces investment in low income countries and has no effect elsewhere, and Dreher (2006) again with similar results.

19A review of World Bank Country Assistance Strategies found that over 90 percent of evaluated CASs recommended the same growth strategy: macro-stability, liberalization, and trade and tariff reform (OED, 2000b).

20 See Kenny and Williams (2001) on the weaknesses in growth theories focusing on investment in human and physical capital and policies in areas such as trade and taxation.

21 The recent outpouring of studies on institutional and geographic factors behind growth includes Easterly and Levine (2002) who find that institutions dominate policies and initial conditions in determining growth outcomes, but that institutions change very slowly.

22 Coviello and Islam (2006).

23 OED (2004) which also suggests regarding programs that promote empowerment “both the intended and actual poverty impact of this type of intervention remain to be demonstrated.” 24 OED (2005a). See also OED (2005b) on investment climate work: “World Bank Group strategies for improving the IC [investment climate] have suffered from a lack of knowledge about what types of institutional arrangements will work... The feasibility of reform depends on the political economy of the reform process...” 25 Brautigam and Knack (2004).

26 Rajan and Subramanian (2005a) find evidence that countries which receive more aid see a decline in labor-intensive and tradeable industries in their manufacturing sector because of the real exchange rate over-valuation caused by aid inflows. McGillivray (2005) cites studies that find a negative relationship between aid flows and tax revenues (although Feyzioglu, Swaroop and Zhu (1998) is one study that points the other way). Djankov, Montalvo and Reynal-Querol (2005) find that foreign aid has a negative impact on democracy (although Dunning (2004) notes that aid is positively related to democracy in Africa in the post-Cold-War period). Svensson (2000) argues that the negative institutional impact of aid is worse in countries with high ethnic fragmentation.

27 Gupta, Clements, Pivovarsky and Tiongson, (2003). See also Moss et. al. (2006) and Brautigam and Knack (2004). Brautigam and Knack find aid associated with both weaker governance (contra Goldsmith, 2004) and lower tax effort in Africa that exactly offsets aid flows, although with suggestive evidence of a reduced impact in the 1990s.

28 Knack (1999). He also suggests that aid was a source for subsidies to inefficient parastatals in Tanzania in the 1970s and 1980s.

29 Knack and Rahman (2004) find that greater donor fragmentation leads to declines in bureaucratic quality. 30 Roodman, 2006.

31 Brautigam and Knack (2004) and Birdsall (2004). A 1989 donor study quoted Brautigam and Knack suggested cutting the number of aid projects from 800 to a more manageable 400 in a post-crisis country – instead the number rose to 2,000 by 1992.

32 Given that much aid is delivered outside the budget process (70 percent in the case of Tanzania in the mid-1990s), it may be that much aid is going to projects that may (correctly) be less than a government priority (Brautigam and Knack, 2004) 33 The survey is McGillivray (2005) -- but he does fail to cite a number of studies that do not find any link - -for example, Rajan and Subramanian (2005b). The metastudy is Doucouliagos and Paldam (2005a). They find that 46 percent of their sample were able to find a statistically positive effect but also find that the studies with the larger samples as well as more recent studies both find smaller correlations between aid and growth, suggesting to them that the increasing number of observations is making data mining increasingly difficult, and (so that) the statistical insignificance of aid on growth may turn out to be more 19