Although World Bank and IMF adjustment lending was intended to deal with the immediate macroeconomic crises, it was also seen as a way of making poor economies more efficient and therefore better able to grow. Growth required a reduced role for the state in the productive sectors, as well as reduced controls on the private sector. Irrespective of the merits or otherwise of reform, countries in economic crisis had little alternative but to sign up to the ** conditionality, since private capital flows slowed dramatically with the onset of the debt crisis in the 1980s and official development flows became one of the few sources of external finance. This was especially true for the low-income countries.
The effects of reforms are never clear-cut. Many people oppose reform (ex ante) fearing a loss, even if this is not the case (ex post). Conversely, some people may gain a lot (for example those producing exports), but the gains are not immediate. Sometimes, a particular reform will benefit the majority of people, but if each person's gain is small, then they do not have much incentive to mobilize in support of reform, whereas the minority may stand to lose a lot and therefore has a much greater incentive to mobilize against reform. Reform can therefore stall even if, in aggregate, it benefits the majority. This is a good example of what Olson (2001) calls a 'collective action problem', which refers to the difficulties that arise in organizing a group of people to achieve a common objective.