Conditionality Effectiveness and the “Dominant Shareholder Pattern” Element: a Comparative Approach of the World Bank and the Asian Infrastructure Investment Bank

A significant part of the Literature on IO policy performance assesses conditionality effectiveness at different, but rather very much interconnected levels. Some scholars argue that conditionality effectiveness may be judged upon measurements, among others, related to bureaucracy, domestic politics or allocation of resources. Others argue that the allocation of funds depends on favoritism of the larger shareholder within an International Organization or the beneficiary country performance. Among others it is also stated that the extent to which IO conditionality leads to the institutionalization of actual implementation of given policy measures which at the end serve the interests of the dominant shareholders appears to be significant when considering conditionality effectiveness. The aim of the paper is to contribute to the discourse by further enriching the existing literature providing another level of potential explanation regarding the evaluation of IOs performance in regard to conditionality effectiveness and, secondly, by attempting to provide an analytical framework to predict individual hegemonic powers stance towards specific IOs. In order to achieve the aim of the paper I introduce the element of the “dominant shareholder pattern” in the analysis and assessment of the conditionality effectiveness. I argue that conditionality effectives is not necessarily assessed at the level of the IO performance or the publicly declared principles but, rather, at a level where the formation of a regime as contemplated by the dominant shareholder is achieved or not. In this case conditionality may serve the acquisition of specific patterns and the strengthening of a given regime the dominant shareholder is contemplating based upon specific interests. This argument will also provide an explanation why dominant shareholders in IOs , such as the USA continue and even strengthen their support to IOs such as the World Bank and the IMF and at the same time question their support to IOs whereby the dominant shareholder element is not there, such as the case of the UN and the UN specialized agencies. The same can also be assessed for the Chinese stance toward specific IOs. The methodology of the paper is based on a qualitative and quantitative analysis. I will develop a comparative approach of the World Bank and the Asian Infrastructure Investment Bank. The criteria for selecting these two Organizations are based on the fact that the shareholding element is there, as well as the element of the dominant shareholder (USA and China respectively). Both countries have been entailed into a trade war with contradicting interests. Therefore, I expect that despite the potential similarities or differences in conditionalities between these two organizations the variable of the dominant shareholder pattern is the one that will ultimately assert the conditionality effectiveness framework.