The World Bank and Institutional Reform: The Technocratic Approach versus Political Survival. A Case Study of Egypt

Abstract

By the late 1990s, it had become evident among the international development community that state capacity and well-functioning institutions are key determining factors for the success of projects aimed at poverty reduction and economic development. Since that time, foreign aid and development organizations have funded projects which aim to facilitate institutional reforms across the developing world. This thesis examines the case of Egypt, utilizing semi-structured interviews and document analysis to test why some World Bank reform projects are more successful than others. It argues that not enough attention has been paid to the political survival imperatives of State elites. This thesis tests this argument through the development of a process tracing model that analyzes the interaction between the World Bank’s technical approach and the domestic politics in three sectoral reform projects. The model draws upon four explanations for likely success or failure of interventions: the World Bank’s weak understanding of a nation’s political context, the isomorphic mimicry of best practices, the political survival of State incumbents, and signaling theory. The case study reveals that political survival is the most likely and yet most neglected explanatory factor of the success or failure of the World Bank’s interventions in institutional reforms in Egypt. There are numerous reasons for why this is so. This thesis argues that ostensible support from the political leadership means very little unless other conditions such as preparedness to commit resources are also forthcoming. Likewise, this thesis finds that isomorphic mimicry does work if best-practice-based reforms are aligned with the political survival of the ruling elites and adapted by domestic reformers rather than by outsiders. My results also indicate that reforms are implemented as signals when local policy makers focus on imitating best practices to gain external legitimacy. I find weak support, however, that reforms are implemented as signals to maintain flows of foreign aid. The findings of this study contribute to research efforts focused on improving the effectiveness of foreign aid and reform of Egypt’s institutions. My results provide significant policy recommendations for the World Bank’s interventions to facilitate institutional reforms.