Effective government

In offering Argentina a credit line this month, the International Monetary Fund insisted that the government improve the independence of judges, spend more on health and education and open its books. Last September, the finance ministers of all 181 IMF member nations signed a declaration that for the first time emphasized the importance of alleviating poverty, establishing the rule of law and cleaning up government.

The new emphasis is not a reversal of past policies. The lending institutions and their member nations are recognizing that, except in a few countries, market reforms were oversold as a cure for poverty.

The banks are also realizing that economic reform alone will not attract the private investment that developing countries need. Investors need well-trained workers, which means education. They need fair and predictable justice systems, and strong, clean agencies regulating securities transactions or environmental protection.

The new emphasis on building state institutions is overdue and important. But caution is in order. The latest focus on institutions will be the most challenging. The banks know what to tell governments about cutting their budgets. Making a judicial system work is a foggier process. These reforms often require an overhaul of a nation's political culture, a task outside the scope of the World Bank or the IMF or the skills of a staff now largely made up of economists.

Problems in early World Bank projects indicate that the bank will have to be prepared for long-term commitments. It must also do more to involve the host government and civil society in the reform process. Reform will fail if imposed from the outside. Fortunately, the new focus at the World Bank and the IMF reflects a growing consensus among member governments that effective government matters.

-- The New York Times