342 CHAPTER NiNE ■ InternatIonal Po lItI cal economy
such relief had to submit plans to channel debt savings into poverty- reduction pro-
grams. These programs have alleviated debt burdens in recipient countries and enabled
them to increase their poverty- reducing expenditures by 3.5 percent of GDP.
Uganda is one beneficiary, working with both local and international NGOs to
develop debt- reduction strategies. A Poverty Eradication Action Plan beginning in the
1990s made major poverty issues top priorities. Resources for school construction, feeder
roads, and water systems were developed by local communities during the consulta-
tive pro cess. Debt relief proved to be part of the answer for some countries as a way to
direct scarce resources for development purposes.
Another change occurred in the international financial institutions beginning in
2009, following a study by the World Bank’s Commission on Growth and Development.
The institutions discontinued structural per for mance criteria for loans, even for loans to
low- income countries, in response to both their critics and the 2008 global financial crisis.
This represents a substantial overhaul of the lending framework. The amount of the loans
can be greater than previously allowed, and loans are to be tailored according to the
respective state’s needs, a direct response to criticism of the “cookie- cutter” approach
of structural adjustment lending. Monitoring of the loans will be done more quietly to
reduce the stigma attached to conditionality. Also in response to previous criticism, the
IMF has urged lending to programs that encourage social safety nets for the most vulner-
able within the populations. Ideas that were previously unacceptable to the IMF— that
capital flows may need regulation and that states might take a proactive role in coor-
dinating economic development— became more acceptable in response to the market
failures of the global financial crisis.^13
A broad consensus has emerged among virtually all states on the utility of market-
oriented economic policies that lead to sustainable economic development. Scarce natu-
ral resources cannot be exploited as in the past; sustainability means that growth can be
ensured for future generations. There must be more emphasis on human development,
particularly education and health. The targets of development— the people— should
have a say in how funds are allocated. And there is much more attention being paid to
the po liti cal dimension of development. Daron Acemoglu and James Robinson, among
others, argue that successful development demands strong economic and po liti cal
institutions that protect private property, foster competition, and ensure the rule of
law to prevent corruption. In short, the current thinking is that institutions play a more
critical role in successful development than the liberal economic model suggests.^14
NGOs or g a nized at the grassroots level to carry out locally based proj ects play a
critical role in this new approach. Involving NGOs in development was one approach for
improving both accountability and effectiveness of both multilateral and bilateral donor
programs. NGOs such as World Catholic Relief, Oxfam, and Doctors Without Borders
not only deliver food and medical assistance during emergencies but also distribute seeds,
drill wells, and plan local- level proj ects that they hope will bring economic development.