#what about academic performance? financial stability? what about general health when in a new environment with limited food options?

[paging-possum]

everyone and their mother has heard me yap about this but ooooooo it is so interesting to think about food accessibility for college students with dietary restrictions especially as a guy who lives on a fairly self-enclosed campus...like at some point I would really like to do some sort of comic looking into 1) the differing experiences of students living with food restrictions on campus and 2) how administration at college make decisions about how to accommodate students...it is such a big thing that influences such a major part of peoples lives and ive found that so few people think about it unless theyre directly affected and I am just so interested in how peoples access to safe food and safe places to eat food influences their daily lives and whether or not that information can be used to improve conditions for them. if any other college students with food allergies/dietary restrictions have thoughts on this that they want to discuss I will love you forever and ever

[creativesage]

(via The Next Phase of Business Sustainability | Stanford Social Innovation Review)

The era of corporations integrating sustainable practices is being surpassed by a new age of corporations actively transforming the market to make it more sustainable.

By Andrew J. Hoffman — Spring 2018

Business sustainability has come a long way. From the dawn of the modern environmental movement and the establishment of environmental regulations in the 1970s, it has become a strategic concern driven by market forces. Today, more than 90 percent of CEOs state that sustainability is important to their company’s success, and companies develop sustainability strategies, market sustainable products and services, create positions such as chief sustainability officer, and publish sustainability reports for consumers, investors, activists, and the public at large.

This trend will not abate anytime soon. Surveys show that 88 percent of business school students think that learning about social and environmental issues in business is a priority, and 67 percent want to incorporate environmental sustainability into their future jobs. To meet this demand, the percentage of business schools that require students to take a course dedicated to business and society increased from 34 percent in 2001 to 79 percent in 2011, and specific academic programs on business sustainability can now be found in 46 percent of the top 100 US master of business administration (MBA) programs.

For all this interest, we should expect the world to become more sustainable. But problems such as climate change, water scarcity, species extinction, and many others continue to worsen. Sustainable business is reaching the limits of what it can accomplish in its present form. It is slowing the velocity at which we are approaching a crisis, but we are not changing course. Instead of tinkering around the edges of the market with new products and services, business must now transform it. That is the focus of the next phase of business sustainability, and we can see signs that it is emerging.

The first phase of business sustainability, what we at the University of Michigan’s Erb Institute call “enterprise integration,” is founded on a model of business responding to market shifts to increase competitive positioning by integrating sustainability into preexisting business considerations. By contrast, the next phase of business sustainability, what we call “market transformation,” is founded on a model of business transforming the market. Instead of waiting for a market shift to create incentives for sustainable practices, companies are creating those shifts to enable new forms of business sustainability.

Enterprise integration is geared toward present-day measures of success; market transformation will help companies create tomorrow’s measures. The first is focused on reducing unsustainability; the second is focused on creating sustainability.1 The first attends to symptoms; the second attends to causes. The first focuses primarily inward toward the health and vitality of the organization; the second expands that focus to look outward toward the health and vitality of the market and society in which the organization operates. The first will help future leaders get a job in today’s marketplace; the second will help them develop a target for a lifelong career. The first is incremental, the second transformational.

Changing the way we do business is essential to addressing the challenges of environmental degradation. The market is the most powerful institution on earth, and business is the most powerful entity within it. Business transcends national boundaries, and it possesses resources that exceed those of many nation-states. Business is responsible for producing the buildings we live and work in, the food we eat, the clothes we wear, the automobiles we drive, the energy that propels them, and the next form of mobility that will replace them. This does not mean that only business can generate solutions, but with its unmatched powers of ideation, production, and distribution, business is best positioned to bring the change we need at the scale we need it.

Sustainable Business 1.0: Enterprise Integration

In its first incarnation, business sustainability represents a market shift. Market pressures bring sustainability to business attention through core management channels and functions. This began with Nixon-era government regulation and grew to include insurance companies, investors, consumers, suppliers, buyers, and others through the 1980s and 1990s.2 Such market pressures can emerge from numerous sources: coercive drivers—from domestic and international regulations and the courts; resource drivers—from suppliers, buyers, shareholders, investors, banks, and insurance companies; market drivers—from consumers, trade associations, competitors, and consultants; and social drivers—from nonprofit organizations, activist groups, the press, religious institutions, and academia.3

While corporate social responsibility (CSR) is one response to such pressures, companies have sought to improve competitive positioning by linking sustainability and corporate strategy. This involves translating the issue into the core language of business management: operational efficiency, capital acquisition, strategic direction, and market growth. In each case, the firm has an established model that it can use to conceptualize the issue and formulate a response. In this way, sustainability becomes much like any other business threat, where market expectations change and technological developments advance, leaving certain industries to adapt or face demise while others rise to fill their place.

For example, when insurance companies apply sustainability pressures on the firm, the issue becomes one of risk management. When competitors apply such pressures, it becomes an issue of strategic direction. When investors and banks do so, it becomes an issue of capital acquisition and cost of capital. When suppliers and buyers do so, it becomes an issue of supply-chain logistics. When consumers do so, it becomes an issue of market demand. Framed in such terms, much of the specific language of sustainability recedes and is replaced by standard business logic. Therefore, companies can remain agnostic about the science of particular issues (such as climate change) but still recognize their importance as business concerns. The successful company can perform this translation process and integrate sustainability into its existing structures and strategies.

Take Whirlpool, for example: It has improved appliance energy efficiency because it has watched energy efficiency move from number 12 in consumer priorities in the 1980s to number three, just behind cost and performance, today. Whirlpool and others expect those concerns to continue to grow.4 One signal of this growth is the LOHAS consumers (Lifestyles of Health and Sustainability), a segment that considers environmental attributes in purchasing decisions and was estimated to be a $355 billion market in the United States in 2016 and a $546 billion market worldwide.

Another signal comes from impact investors, who consider environmental, social, and governance (ESG) factors in their investment criteria. The sector reached $8.72 trillion of professionally managed assets in the United States in 2016, or one-fifth of all investment under professional management. But it is not just a specialized sector; this past May, financial advisory firms BlackRock, Vanguard, and State Street cast votes in opposition to ExxonMobil management and called for the company to disclose its climate change impacts.

These are all signs that the market has shifted and continues to shift. Today, consumers can buy sustainable products, stay in sustainable hotels, eat sustainable foods, and use sustainable cleaning products. While this greening of the market is a good thing, it is not actually solving the root problems it was meant to address. Our world continues to become less, not more, sustainable.

Sustainable Business 2.0: Market Transformation

While business sustainability has been going mainstream, the world has witnessed unprecedented human impacts on the natural environment that threaten the viability of life on Earth. To mark this shift, scientists have proposed that we have left the Holocene and are now entering the Anthropocene, a new geologic epoch that acknowledges the enormous influence of the world’s 7.5 billion people (to be nearly 10 billion by 2050) on the planet.5

To measure that influence, they have identified nine “planetary boundaries” that represent “thresholds below which humanity can safely operate and beyond which the stability of planetary-scale systems cannot be relied upon.”6 These are what Lancaster University management professor Gail Whiteman has called the “key performance indicators” (KPIs) of the planet, many of which are not doing so well. While one (ozone depletion) is on the mend, scientists believe we have overshot the boundaries of three: climate change, biodiversity loss, and biogeochemical flows (nitrogen and phosphorus cycles). Further indicators are also blinking red, such as ocean acidification, freshwater use, and deforestation. The remaining two boundaries—chemical pollution and atmospheric particle pollution—require more data to assess. All of these disruptions are the result of system failures created largely by our market institutions. They will have to be remedied by those institutions.

Fortunately, capitalism can be quite malleable. It is designed by human beings in the service of human beings, and it can evolve to meet the changing needs of human beings. This has happened throughout its history to address issues such as monopoly power, collusion, and price-fixing. Today’s pressing need is sustainability—particularly to address climate change—and legislators are not the only ones who can shift course. Many companies recognize this challenge and are pushing for new market models. In the words of Unilever CEO Paul Polman, “We are entering a very interesting period of history where the responsible business world is running ahead of the politicians” and taking on a broader role to “serve society.”

The next phase of business sustainability calls for a transformation of the market, discarding such outdated notions as treating the environment as a limitless source of materials and sink for waste, seeing economic value as the only measure of nature’s worth, encouraging unbridled consumption, and considering perpetual economic growth as even possible. Corporate decision makers have a key role to play in facilitating this transition. Instead of accepting the rules of the market as given, they must change them to incorporate the planet’s KPIs. For example, to turn around the KPI of climate change, the market must go carbon neutral and eventually go carbon negative. We don’t yet know how to do that, but we know that it cannot be done by one company or one product. It requires a change in the overall market.

Real sustainability is a property of a system.7 For example, the notion of an energy company installing a wind farm and calling itself sustainable makes no empirical sense. A more sustainable energy system incorporates the whole grid, encompassing generation, transmission, distribution, use, and mobility. We can already see signals of this change happening as new energy sources, distributed energy, demand-side management, smart appliances, and smart meters are beginning to transform our conceptions of energy. Already, jobs in the clean energy sector have exceeded those in oil drilling.

But the energy renaissance goes further. Electric vehicles have the potential to change the grid, leveling the electricity demand curve by charging at night and providing storage capacity during the day for intermittent energy sources like wind and solar. Already, a Nissan Leaf automobile owner in Japan can buy a transformer to power the house off the battery pack during a power failure. Research is under way to scale this concept and allow consumers to rent their batteries to utilities while their car is parked. Electric vehicles are also transforming the auto industry. Who could have predicted 20 years ago that new entrants like Tesla would enjoy a larger market capitalization than General Motors?

And as the shift to driverless cars continues, IT companies such as Apple and Alphabet have entered the fray, shifting success factors in the auto sector from hardware to software, and with them our conceptions of personal mobility. For example, as incumbents such as Ford Motor seek to become mobility providers, they must learn to operate like the airline industry, where profits increase when their cars spend minimal time idling. Given that today’s personal car is parked 95 percent of the time, driverless cars can result in fewer cars on the road (at least in urban centers) as people purchase mobility services rather than own cars. Fewer cars on the road means repurposing unneeded roads, parking lots, garages, and service stations.

Systemic Corporate Strategies

As we see with the energy and transportation sectors, the potential scope of market transformation is vast. To help flesh this out, we can conceive this sustainability revolution as proceeding from two initial phases. First, corporations rethink their business strategies to play a stronger role in guiding the sustainability of the systems of which they are a part. Second, the business model itself undergoes reconceptualization. The first phase includes at least four new ways of conceiving their approach to operations, partnerships, government engagement, and transparency.

New conceptions of operations

Market transformation calls for optimizing supply-chain logistics to reduce risks from numerous factors such as disruptions due to increased storm severity caused by climate change; current and future resource availability and price volatility; accelerating emissions and concerns for public health and the environment; and the future resilience of business and civil society. These risks can directly affect assets and operations, availability and costs of inputs, regulation of sourcing and distribution, workforce availability and productivity, and stakeholder reputation. For instance, Nestlé, Coca-Cola, Cargill, and General Mills have all faced threats to supply chains due to the decreased availability of water, a once-plentiful resource now scarcer because of climate change and over-consumption.

To better manage such operational systems, companies are moving away from linear models in which items are created, used, and disposed of once they reach their end of serviceable life, and toward circular models, where items are created, used, and then either restored or reprocessed to recover energy or materials that can be used again. One key to this new vision of a circular economy is that it is regenerative by design; it is organized to keep products, components, and materials at their highest utility and value at all times.

For example, industrial and consumer products company Ricoh has concluded that by 2050, there will be an insufficient supply of many reasonably priced raw materials to support its manufacturing needs. As a result, the company is revising its business model using life-cycle analysis as the basis for decision making and establishing a series of what it calls “Resource Smart Solutions” for product design and manufacturing, reuse, collection, maintenance, and materials recovery. To change the system around it, the company is also helping its customers reduce energy use, carbon footprint, and virgin material use while also expanding its own opportunities for product refurbishing, recycling, and new designs. Targets include reducing virgin resource use by 25 percent by 2020 and 87.5 percent by 2050. In adopting circular economy thinking, Ricoh is striving to move beyond incremental efficiency goals to more ambitious “net zero impact” business operations.8

New conceptions of partnerships

Going beyond the supply chain, companies also look to novel partnerships outside standard modes of shifting the market, including nonprofit organizations, the government, competitors, and seemingly unrelated companies.

For example, as Ford increased its research and development in hybrid and electric drivetrains, it saw an opportunity in how customers would live more electrified lifestyles overall. Together with Infineon, SunPower, Whirlpool, and Eaton, Ford developed the MyEnergi Lifestyle program, exploring ways in which hybrid electric vehicles, solar power systems, energy-efficient appliances, and home design can be integrated to reduce the total carbon footprint. Similarly, Toyota Motor is seeking a broad array of partnerships to achieve its goal of going “beyond zero environmental impact” by eventually eliminating CO2 emissions from vehicle operation, manufacturing, materials production, and energy sources by 2050.

New conceptions of government engagement

Very few business schools offer courses on collaborative and constructive lobbying. Indeed, the public perceptions of lobbying are generally negative. But lobbying is basic to democratic politics as governments seek guidance on how to set the rules of the market and usher reforms as needed. Forward-thinking companies are looking for ways to participate constructively in policy formation.

For example, Intel was instrumental in calling attention to the horrors of tin, tantalum, tungsten, and gold mining in the Democratic Republic of Congo. While the company could have simply stopped sourcing such conflict minerals from the region, it did not want to create additional hardship for legal mining operations. Instead, it helped create provisions in the Dodd-Frank Act that require the tracking and disclosure of such mineral sourcing within the broader electronics industry.

This is not unusual. Companies are also working with governments to phase out heat-trapping HFC chemicals and setting new efficiency standards on trucks. The Paris Agreement on climate change would not have been possible without the powerful business interests that helped broker a deal. In each of these examples, business took a responsible position in bringing about a sustainable shift in the market through policy.

New conceptions of transparency

The only way that market transformation will be successful is through trust, and trust can be gained only through greater transparency. The expansion of corporate influence in society, particularly as it relates to government, will make some justifiably uneasy. But robust reporting mechanisms can help allay those fears and also help protect companies from the effects of misconduct, including legal liability and penalties. To be sure, companies are already disclosing numerous sustainability indicators through established standards, such as the globally recognized Global Reporting Initiative or Carbon Disclosure Project. But transparency goes further as companies face increasing demands for data, for both internal management and external validation, under the watchful eye of activists, investors, suppliers, buyers, employees, and customers. The gathering and dissemination of such information can open up new awareness of supply-chain risks and opportunities.

For example, IBM and partner companies are experimenting with blockchain technology to transform visibility and traceability in complex, often opaque, global supply chains. In 2017, IBM piloted supplychain blockchain with Walmart to address food safety in its global supply and distribution network and plans to roll it out further with nine global agricultural companies. In another example, Nestlé conducted an internal investigation of its Thai fish supply chains in 2014 and found forced labor and brutal treatment of workers. But in a dramatic shift from standard practices of privacy and nondisclosure, the company posted the report online, imposed new requirements on suppliers, and commissioned outside auditors to assure compliance. This public disclosure compelled other companies that source fish in Thailand to follow suit, shifting the competitive dynamics of supply-chain logistics.

New Ways of Doing Business

Market transformation not only compels more systemic business strategies but also challenges traditional ways of conceiving business itself. It demands new conceptions of corporate purpose, notions of consumption, and models and metrics of business success.

New conceptions of the corporation’s purpose

The dominant idea of the purpose of the corporation as simply to make money for its shareholders took hold within business in the 1970s and 1980s. But the narrow pursuit of shareholder value leads to excessively short time horizons for investment planning and measures of success. It also leads to a focus on only the type of shareholder who is less interested in sustainability efforts and, in the words of Cornell Law School professor Lynn Stout, is “shortsighted, opportunistic, willing to impose external costs, and indifferent to ethics and others’ welfare.”9

New ideas of corporate purpose are beginning to grow within business practice and education. For example, benefit corporations are one type of innovation that seeks to integrate a broader array of objectives than simply profits into its forms of organizing, governance, and legal statement of purpose. And other companies are watching closely, sometime mimicking them. This trend has caught on among MBA students who challenge conventional thinking around capitalism and corporate purpose. At the Harvard Business School, an immensely popular course called “Reexamining Capitalism” explores “the evolution, power, and limitations of our current capitalist systems” and “how the ‘rules of the game’ by which capitalism is structured should change” to address the social and environmental issues of our day.

New conceptions of consumption

Is “sustainable consumption” an oxymoron? The World Business Council for Sustainable Development doesn’t think so, calling on businesses to “abandon the existing consumption paradigm” and move toward “transformations in mainstream lifestyles and consumption patterns.”10 Several businesses and activists have sought to put such an idea into practical use.

For example, Patagonia, through its Common Threads Initiative, encourages people to buy used Patagonia products on eBay before going to the store to buy them new. Adbusters has long promoted its “Buy Nothing Day,” what it calls a “24-hour moratorium on consumer spending” as a counterpoint to the Black Friday spending spree that traditionally follows the holiday of Thanksgiving. The outdoor lifestyle retailer and co-op Recreational Equipment (REI) closes its 149 stores on Black Friday as part of its “#OptOutside” program. In 2016, Subaru, Google, Meetup, Upworthy, and competing outdoor brands such as Burton, Keen, Yeti, and Prana chose to partner with the effort. In the end, resource use must be reduced at the source, and that means developing new models of consumption.

New conceptions of business models and metrics

Market transformation requires a compelling new business model to replace traditional ones that dominate business thinking. For example, neoclassical economics and agency theory employ dismally simplified models of human beings as driven primarily by selfishness, where those running the company (agents) will shirk or even steal from the owner (principal) if they do the work and the owner gets the profits.

But behavioral economists have argued that real humans don’t behave as neoclassical economics suggests we do, and legal scholars argue that managerial motivations are far more complex than a simple principal/agent relationship and instead involve thousands of shareholders, executives, and directors with more socially positive motivations. And new models have arisen, such as positive organizational scholarship and appreciative inquiry, that move beyond standard cynical conceptions of human behavior to understand how and why people are motivated to devote their work toward improving the world around them and learn how to create the organizational conditions that will foster that activity. These models are gaining increasing interest in business teaching, research, and practice as a way to create a more committed and effective organization.

Other models are also beginning to gain recognition. Doughnut economics11 is a model of economic growth that links social justice to efforts to stay within the planetary boundaries of the Anthropocene epoch. Shared value is aimed at redefining capitalism by arguing that the competitiveness of a company is closely tied to the health of the communities in which it is embedded.12 Conscious capitalism is a model of business that serves the interests of all major stakeholders—customers, employees, investors, communities, suppliers, and the environment. And regenerative capitalism reimagines capitalism in terms that are self-organizing, naturally self-maintaining, and highly adaptive to produce lasting social and economic vitality for global civilization as a whole. Each of these models is seeking an amended form of capitalism that is sensitive to the constraints of the Anthropocene.

Closely related to models of business behavior are the metrics used to define success, many of which lead to unsustainable outcomes. For example, discount rates are used to capture the time value of money—the fact that a dollar today is worth more than a dollar tomorrow. But a common discount rate of 5 percent leads to a conclusion that everything 20 years out and beyond is worthless. When gauging the response to climate change, is that an outcome that anyone—particularly anyone with children or grandchildren—would consider ethical? London School of Economics professor Nicholas Stern answered no with an argument that used an unusually low discount rate when calculating the future costs and benefits of climate change mitigation and adaptation.13

Another problematic metric is gross domestic product (GDP). This measure of national economic health fails to distinguish between financial transactions that add to the well-being of a country and those that diminish it. Any activity in which money changes hands will register as GDP growth, even money spent on recovery from natural disasters and pollution cleanup. To examine alternatives, former French president Nicolas Sarkozy created a commission, headed by Nobel laureates Joseph Stiglitz and Amartya Sen. Their 2010 report recommended a shift in economic emphasis from the production of goods to a broader measure of overall well-being that would include measures for categories such as health, education, security, and sustainability.14

Reshaping Politics to Reshape the Market

A discussion of market transformation and the corporation’s shifting role in society cannot be complete without a discussion of the current political and social climate and what impact it has on this agenda going forward. The Trump administration denies the science of climate change and has embarked on an agenda of loosening the regulatory environment to stimulate economic growth. This is a similar script to that employed by President Ronald Reagan more than 35 years ago when he appointed Ann Gorsuch Burford to lead the US Environmental Protection Agency, James Watt to head the US Department of the Interior, and Rita Lavelle to run Superfund, the program for cleaning up the country’s most polluted sites.

Reagan’s appointments set about slowing or stopping environmental enforcement, but they ultimately led to scandals and created a critical public backlash: In 1983, all three were removed from office, and in subsequent years, Congress went on to strengthen numerous environmental regulations, and environmental groups increased membership and budgets. In the words of former Sierra Club executive director Carl Pope, Reagan “reinvented the environmental movement by his contempt for it.”

While President Trump’s approach to the environment bears similarities to Reagan’s attempts to roll back environmental regulations and likely faces a similar backlash, there are several key differences. First, some of the backlash this time will come from businesses that are leading on greenhouse gas reductions and not fighting government-led environmental policies, as they did in the 1980s. Indeed, recent surveys show that 85 percent of business executives believe that climate change is real (well above the national average of 64 percent), and many see the associated market risks and benefits. General Mills CEO Ken Powell was not alone when he told the Associated Press, “We think that human-caused greenhouse gas causes climate change and climate volatility, and that’s going to stress the agricultural supply chain.” Cargill executive director Greg Page warns of food shortages if we do not act. Such concerns represent a strong and growing perspective within the corporate sector that we have a problem and government inaction will only make it worse.

While those who lose in a carbon-constrained world (such as fossil fuel interests) will continue to resist acknowledging climate change, most companies see the long-term trajectory of this issue and do not see the current administration’s position as the long-term future. The market is shifting with or without the US government, as other national governments as well as many US state and city governments continue to set policies. Many companies are part of global markets and see the US withdrawal from the Paris Agreement as ceding US leadership but not stopping the market transformation that is under way. Some markets may slow, but some may just move to other parts of the globe, such as Germany, India, and China, where heavy investments in renewable energy and alternative drivetrains (such as electric and hybrid) are viewed as the future of the energy and mobility sectors.

The public is also moving in favor of sustainability. Already, public opinion polls show that an increasing number of Americans believe climate change is real. Some even show that a majority of Republicans—including 54 percent of self-described conservative Republicans—now believe that the world’s climate is changing and that human beings play some role in the change. This is a marked shift from 2009, when just 35 percent of Republicans believed that climate change was real. The truth is that many Republican politicians, congressional aides, lobbyists, and staff believe in the science of climate change as well but are waiting for the right political cover to voice their views.

Concern for the environment is a long-term interest of the American public, one that is more latent than urgent and top of mind. While surveys show that it ranks low on election issue topics—number 12 in one poll, behind the economy, terrorism, foreign policy, and health care—it is also driven by saliency, and it will awaken when threatened. That awakening can be triggered by any number of levers. If history is any indication, smart business leadership will read these signs, anticipate the market shift, and seek to take advantage.

[Entire post — click on the title link to read it with the detailed list of footnotes at SSIReview.]

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At Creative Sage™, we love to connect corporate leaders and entrepreneurs with good causes, and help companies start genuine Corporate Social Responsibility and Sustainability, Social Entrepreneurship, Intrapreneurship, Impact Investing and/or philanthropy programs that are a win-win for all partners. We’re also researching new developments in the Sharing Economy that include new business models to increase profits, and also support social good.

Please do not hesitate to email us if you would like to discuss your situation and find out more about how we can help your organization move forward to a more innovative and profitable future, strengthening your branding and resonance with customers while helping to do good in the world through appropriate, authentic CSR partnerships with nonprofits, philanthropists, educational institutions and programs, or government agencies and community organizations.

We can also help you connect with celebrities and other notable people who can help amplify your message of social good, or headline entertainment events and concerts for good causes. You can call us at 1-510-845-5510 in San Francisco / Silicon Valley. We look forward to talking with you!

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[whittlebaggett8]

Girls’ Education in India and the Maharaja Bhagwat Singh of Gondal

In philanthropy nowadays, it is extensively approved that expenditure in girls’ schooling yields large social impression.  This is most not long ago personified by Malala, whose Malala Fund appeals to our hearts with stories and our heads with information demonstrating that educating women increases the economies, well being, stability, and atmosphere of nations and communities close to the world.

A short while ago and unexpectedly, I arrived throughout a distinguished proponent of this idea – not at Davos or the United Nations or the Invoice & Melinda Gates Basis – but fairly in a spouse and children library in India leafing by paperwork that clarify social experiments begun accurately 100 several years ago.

Likelihood are you’ve never ever read of Gondal, a tiny town in western Gujarat now acknowledged for its flourishing metals producing business, proximity to the lion-filled Gir Forest, and eponymous chili peppers, which are served fried for breakfast. In the mid-19th century, Gondal was also known for quite a few progressive social innovations that we would now categorize as “high affect philanthropy” funded by “public-personal partnership.” Chief among the these, in my opinion: free and obligatory education and learning for ladies.

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A Maharaja Acknowledged for Progressive Thinking

This notion was the brainchild of the Maharaja Bhagwat Singh, who ruled Gondal from 1869 right until his demise in 1944. Educated at the University of Edinburgh, he was the only Maharaja grew to become a health-related physician and the only princely ruler to turn out to be a Fellow of the Royal Higher education of Medical professionals of Edinburgh.  He was also a attorney and engineer, obtaining 11 diverse levels throughout his life span and publishing the largest Gujarati dictionary and the 1st Gujarati encyclopedia. Returning to Gondal from his training overseas, Bhagwat Singh carried out a set of reforms and improvements that ended up astonishing in their depth and breadth, and in their intention to make improvements to the lives of the citizens of Gondal, even in today’s conditions. Whilst these were attained via his general public administration, he also leveraged both personal and personal charity to develop colleges, train instructors, and boost the variety of girls attending university additional than 25-fold more than a 50-12 months period of time.

Amid the Maharaja’s most celebrated improvements was that he abolished all taxes, customs, and export obligations, generating Gondal the only condition in India to be tax-totally free. He reformed the point out administration, erecting hospitals, schools, and faculties – which includes a reproduction of Eton that is nevertheless used for education now. He introduced contemporary animal husbandry procedures to rural farmers and crafted irrigation networks. Setting up in the 1920s, he released sewage, plumbing, rail traces, telegraphs, phone cables, and electricity to Gondal, creating it the initially city in India to adopt this kind of modern-day know-how.  The sewage and electric power lines have been put in underground, a ahead-thinking transfer that has been replicated only in the biggest of Indian cities right now. Every single village in Gondal experienced a telephone, put up office environment, and law enforcement station. He was involved about the surroundings as perfectly, planting hundreds of trees and forbidding searching.

In a popular story, when there was drought and famine, he place countless numbers to do the job not making a new palace for himself, as other Maharajas had performed in comparable circumstances, but creating a dam and reservoir for the public superior that controls irrigation even now. Notably in the course of those people dire moments, he set up a “task do the job system” funded by the state that paid citizens at all degrees in accordance to their power to get the job done, reasoning that his farmers and artisans would be ashamed by charity hand-outs when they ended up starving. Only the weakest and most infirm were being supplied free foods and shelter without the need of asking for any operate in return.

The Maharaja’s Most Notable Decree

Even so, just one of his most notable decrees was in 1917. That 12 months, he took the groundbreaking step of earning schooling cost-free and obligatory for girls involving the ages of 7 and 11 in all villages of Gondal.  He did this following examining dismal figures on girls’ literacy in Gondal from 1911, demonstrating 10 p.c literacy among the boys but only 2 percent between women.  Ahead of the decree, he despatched officials into the countryside to clarify the new rule to dad and mom and respond to queries and worries. Wisely, he enforced this decree far too if a woman did not display up to faculty for 3 consecutive times, he sent another person to the dwelling to locate out what was occurring and, if an unsatisfactory reason was offered, desire that the girl be sent to university.

What was the wondering guiding this decree? Books about the Maharaja from that time paint a portrait of an enlightened chief, fully commited to woman empowerment. He opposed polygamy and kid relationship, stating that females really should have the skill to opt for their husbands. He also abolished the purdah method, common in the course of that time, in which females had been secluded from the community by wearing concealing apparel and by the use of significant partitions, curtains, and screens inside of the residence. In fact, under his rule, “Zananas,” or limited women’s wings, had been no extended constructed in any of the palaces. At the urging of her spouse, the Chief Queen, Maharani Nandkunvarba, famously broke the extended-long lasting customized herself by showing up unveiled in public. She was presented the “Crown of India” award by Queen Victoria herself for her attempts to carry girls dignity and great importance.

When it arrived to girls’ training, the Maharaja took a strategic view. Whilst admitting that girls’ schooling would not impact financial development in Gondal, as females at that time worked only in the property, according to a 1934 biography, he explained that it:

experienced a social price that could not be exaggerated. She, in time, would bear children and the kids would be less than her practically distinctive care in the course of the most impressionable many years of their life. If she had attended faculty they would imbibe schooling as they fed at her breast, or ended up dandled in her arms, or tugged at her sari as she went about undertaking her each day tasks. To teach a lady as a result meant that a complete household would be uplifted whereas to deliver a boy to college may possibly conceivably signify that only a single unique experienced appreciated the rewards flowing from the fount of expertise.

The Maharaja also imagined that, psychologically, an emphasis on girls’ instruction would guide boys to schooling far too, as they would not want to “be left powering.”

The results communicate for on their own. In 1916-1917, the variety of women in university in Gondal was 891. Just 12 months later, that selection experienced increased just about 5-fold, to 4,101 ladies in faculty. By 1925, the share of girls in faculty in Gondal stood at 3.2 p.c, compared with Bombay, a key city, at 2.25 percent. By the time of the Maharaja’s “Golden Jubilee” in 1934, important development experienced been made in instruction in Gondal, both equally for boys and for ladies. In unique, the variety of college students in Gondal experienced amplified from 2,500 to 19,780, in accordance to Shree Bhagvat Sinhjee: The Maker of Modern-day Gondal, by St. Nihal Singh. Ladies made up 42 % of that number. The amount of universities experienced elevated from 30 to 191. Academic expenditure from the community purse experienced greater 10 occasions, while expenses from personal charity went from zero to over 30,000 rupees and gifts from the Maharaja’s individual personalized charity had absent from zero to more than 1,400,000 rupees.

Currently, we communicate about the great importance of innovation and replication in philanthropy, the leverage received from community-non-public partnerships, and the higher social effect of investing in girls’ instruction. More than 100 several years back, the Maharaja Bhagwat Singh not only understood these ideas but implemented them actively in his state, with final results however apparent these days.

According to the latest Indian census figures, from 2011, the literacy amount of the state of Gujarat, where by the metropolis of Gondal is situated, is 79.31 p.c — 87.23 per cent for gentlemen and 70.73 percent for women. This ranks Gujarat in the middle of Indian states in phrases of literacy: 18 out of 36 states, with Kerala at the top and Bihar at the bottom. In the metropolis of Gondal, however, the literacy rate is higher than that of the condition: 84.26 per cent general – 88.6 per cent for guys and 79.62 % for women. This ranks Gondal closer to the Indian condition of Himachal Pradesh in phrases of literacy rates, 11th on the listing of 36 states from the 2011 census.

Further than the quantities, the people today of Gondal don’t forget and rejoice the reign of the Maharaja Bhagwat Singh with heat and adore. Inside the metropolis, there are still previous gals who proudly reference the well-known Maharaja as the reason that they can study lawful documents and sign their names, in its place of relying on a thumbprint signature. “The persons named him ‘The Selfless Ruler,’” his terrific-grandson, the Yuvraj of Gondal famous in an interview with me in May perhaps 2018. “They revered the way in which he often place the pursuits of the persons forward of his very own and lived life according to the relatives motto of ‘Simplicity and Truth.’”

The Royal Spouse and children of Gondal continues the custom of philanthropy and public assistance these days, most lately restoring the Royal Opera Household in Mumbai. The only surviving opera household in India, it received the UNESCO Asia-Pacific Award for Cultural Heritage Conservation in 2017. When asked about this venture, the present-day Maharaja of Gondal told me in May 2018, “It presents me huge enjoyment to see the Royal Opera House getting revived again to its primary glory. The Gondal household has often been a terrific patron of artwork, society and schooling. We are joyful that the Royal Opera Residence, Mumbai, in this new avatar, is by now staying touted as the Cultural Crown of the metropolis and will be appreciated by the generations to appear.”

Substantially, the family’s tradition of giving continues in Gondal as nicely – in unique to support agricultural assignments and schools for girls.  At the Maharani Shree Rajkunwarba Women Higher University in Gondal, above 500 ladies ages 10 to 16 board at the faculty and graduate from secondary faculty. Nearly all go on to total their 11th and 12th standards and 80 % matriculate at area universities. When I requested the recent Maharani in Might 2018 why the household feels so passionate about this university, she explained, “It is pretty very clear.  We know that training is the pivot of social progress and that the training of girls is essential to our long run.” Her grandfather-in-legislation, the Maharaja Bhagwat Singh, would concur.

Daniela Kaisth is President of Gratias Partners and Vice President of the EastWest Institute.

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This model is increasingly having an influence

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This model is increasingly having an influence

News reports of the International Monetary Fund’s (IMF) activities abound in most countries across the globe yet there is little consensus in the literature as to the effectiveness of the IMF’s work. The purpose of this study is to provide a systematic review of the IMF literature that identifies the effects of IMF bailouts from the 1970s to the present. We investigate significant elements and consequences of the IMF’s bailout policies and implementation approaches such as bailout effectiveness, moral hazard, conditionality, leadership, governance and the sustainability of IMF policy. Based on our review, we develop the ‘Spiral of Doom’ framework and argue that the effectiveness of the austerity package attached to bailout funds is questionable because the design of the package overlooks the recipient country’s unique economic status and cultural background. We then propose financial engineering solutions as an alternative to IMF bailouts which it is envisaged may minimize the moral hazard problem associated with bailouts.

Keywords BailoutConditionalityEffectivenessEconomic growth 1. Background The International Monetary Fund (IMF) was established in 1944 to promote international economic cooperation and provide its member countries with short-term loans if they experience a financial crisis or a shortage of liquidity for international trading. In return, bailed-out countries are required to implement a series of economic reforms in line with IMF policy. Debates about the appropriateness of the IMF bailouts continue to thrive. Opponents of IMF bailouts argue that they make troubled countries further dependent on the IMF (Bandow & Vasquez, 1994; Corsetti, Guimaraes, & Roubini, 2006), while proponents claim that the liquidity supported by the IMF is crucial in preventing extreme financial consequences. Yet studies addressing the adoption of IMF bailouts are largely independent of those that address the effectiveness of the IMF. This lack of integration within the research could be fueling the inconsistencies in the literature addressing IMF bailouts. The purpose of this study is to expand on the current literature by investigating several important, yet under-researched, elements related to the IMF’s bailout policies and implementation approaches, including leadership, governance and the sustainability of IMF policy. For example, IMF bailout policies typically have a short-term focus. Recipient countries are forced to implement economic reforms to return their budgets to surplus in a short period of time. However, in the long term, tough austerity packages may further deteriorate the weak economies of recipient countries. Additionally, IMF bailout policies are overly rigid as they fail to accommodate a recipient country’s economic status and cultural background as part of the bailout design and implementation process. In 2012, the Governor of the Malaysian Central Bank, Zeti Akhtar Aziz, stated that ‘The adjustment, the austerity and consolidation of the fiscal position has to be done gradually because any drastic prescription or conditionalities would drive the country into a new phase of economic recession and this would increase the cost to the economy and make recovery potentially more remote’. In this regard, indebted countries, such as Greece, should be given more time to implement reforms and clean up their finances; an overly stringent austerity drive could push such countries into a prolonged recession and make recovery even more unlikely (Chua, 2012). This is evidenced in Greece’s painful experience over the past few years, which has resulted in the country defaulting on its 1.6 billion euro debt payment to the IMF, which in turn will likely lead to its exit from the European Union (EU) zone and possibly even the EU. Consequently, the European Central Bank (ECB) has expended emergency funding to the Greek banks as the Greek people withdrew billions from their savings accounts. In light of the above discussion, our research seeks to address the following research question: In what way, if any, do IMF bailouts contribute to a country’s financial recovery and stability?

The extant literature is inconclusive as to whether IMF bailouts are effective. This study reviews the critical issues related to IMF bailouts and offers constructive resolutions for the following four issues:

Issue 1: One of the key issues concerns the effectiveness of IMF bailouts and whether they significantly improve a country’s economic performance and financial stability. Issue 2: The IMF is criticized for forcing recipient countries to adopt policy reforms without considering the difference in economic status, business environment and culture among countries. The short-term focus of the austerity package may damage the economic development of bailed-out countries in the long term. In addition, frequent bailout actions can lead to moral hazard. Issue 3: Corporate governance plays an important role in economic development and investor protection. We posit that countries whose leadership adopts sound corporate governance systems are more likely to recover from an economic crisis and return to economic stability. Issue 4: Evidence shows that financially stressed nations are bailing out other financially stressed nations with borrowed money. The IMF obtains money from various nations that are themselves drowning in debt. The five largest contributors to the IMF are the United States (16.75%), Japan (6.23%), Germany (5.81%), France (4.29%), and the UK (4.29%)—all of which, unfortunately, are in debt. So what happens when the contributor nation runs out of money and is no longer able to contribute? For how long can this situation continue before the entire system collapses? Such concerns add more credence to the argument that new ways and approaches to fund IMF bailouts are required. To address the research question and four issues raised above, this study undertook an examination of research in the areas of management, finance, social science, government and the media that focused on the IMF’s financial assistance activities between 1970 and 2015. This involved a review of over 1300 academic studies and reports. Based on the criteria for the selection of papers examining the effect of the IMF aid programs, and to ensure the integrity of the research methodology, these papers and reports were reduced to approximately 700 academic studies and official reports drawn from various governments and the IMF. These documents then, progressed for inclusion in the second stage, entailing a category theme analysis (Aronson, 1995). Thematic coding was developed inductively and the studies were categorized by dependent and independent variables. The findings generated an understanding of the constructs and their relationships, which facilitated the development of the study’s framework. The following sections focus on the effectiveness of IMF bailouts, the moral hazard issues surrounding IMF bailouts, the effectiveness of the conditionality of the IMF package, the corporate governance of IMF and debtor countries, and the financial engineering of IMF bailouts. Based on the existing literature, a bailout model is then developed. The final section provides a short summary of the research findings and suggestions for future research.

2. Literature review 2.1. The effectiveness of the IMF bailout For decades, the IMF assumed the role of rescuer of financially troubled countries. However, it does not hold a convincing record of enabling countries to return to financial health and stability (Johnson & Sweeney, 1997; Bordo & Schwartz, 2000; Corsetti et al., 2006). Evidence suggests that IMF bailouts might lead to moral hazard, implying that debtor governments tend to have more aggressive economic policies, leading to a higher chance of receiving an IMF bailout in the future (Dreher, 2004; Corsetti et al., 2006; Lee & Shin, 2008). IMF programs have three components: financing packages, structural reforms and macroeconomic policies. These three elements are inseparable as together they form a single offer of assistance, known as an IMF-supported program. The effects of an IMF bailout are well documented. However, the empirical evidence is varied and inconsistent. Empirical studies employ different methodologies, use a wide variety of samples spanning a number of time periods and ask different questions when examining how the IMF program affects the economic performance of indebted countries. The popular approaches to assessing the effects of IMF intervention are based on an examination of the economic performance of bailed-out countries before and after the IMF intervention or comparisons between countries that do and do not receive such assistance (Steinwand & Stone, 2008). Existing studies cannot provide a conclusive answer as to whether IMF programs influence the economic growth of indebted countries (Dreher, 2006). Mixed findings are reported in the literature, identifying positive and negative relationships, as well as no relationship, between the IMF bailout and the economic performance of bailed-out countries. For example, in support of the benefits of IMF programs, Reichman and Stillson (1987), and Conway (1994), assert that the IMF provides significant benefits to a bailed-out country’s economic output. Based on data drawn from 69 developing countries during the period 1973–1988, Kahn (1990) reported that IMF programs have short- and long-term positive impacts on the performance of the current account, the balance of payment, and inflation. This finding is consistent with the conclusions presented by Bagci and Perraudin (1997) and Dicks-Mireaux, Mecagni, and Schadler (2000). Some studies found that the IMF bailout is effective when the debtor country makes the necessary policy adjustments (Morris & Shin, 2006). Moreover, various researches identified that the IMF intervention induces short-term creditors to roll over where IMF programs significantly increase the probability of local currency depreciation (Dreher & Walter, 2010). In contrast, most studies find that the IMF bailout has a negative effect on the economic performance of recipient countries. For example, Bordo and Schwartz (2000) analyzed the annual data from 11 Latin American and 13 Asian countries for the period 1973–1998 and found that the performance of recipient countries was worse after they received assistance from the IMF. Analysing data from 98 countries over the period 1970–2000, Dreher (2006) found that the overall impact of an IMF bailout is negative. Such a negative impact might be due to either the provision of inappropriate advice by the IMF or the occurrence of moral hazard issue as a result of the IMF bailout. Drawing on data from 130 countries over the period 1975–1999, Barro and Lee (2005) also reported that the IMF bailout has a negative impact on the economic growth of bailed-out countries. In addition, they found that the IMF’s decisions on which countries will be given a loan are highly politically driven. Loans tend to be larger, and more frequent, if the recipient country: (1) has a bigger representation among IMF staff; and (2) is more politically and economically connected to the US and major European countries. More recently, analyzing data from 57 developing and emerging economies for the period 1975 to 2008, Jorra (2012) argued that an IMF program cannot improve the economic performance of bailed-out countries. Furthermore, his empirical evidence shows that IMF bailouts significantly increase the probability of subsequent sovereign defaults by approximately 1.5–2%. However, a few studies identified no significant economic results attributable to IMF bailout interventions. For example, Donovan (1982) investigated the macroeconomic performance of countries associated with IMF programs during the period 1971–1980, and found that these countries experienced a significant balance of payments improvement, yet their economic growth rates were not significantly improved. Atoyan and Conway (2005) investigated the effectiveness of IMF programs in 95 developing countries for the period 1993–2002, and identified that IMF programs do not significantly improve real economic growth in participating countries in the short term. However, evidence of an improvement in economic growth in these countries was found in the years following involvement in a program. Similarly, Easterly (2005a,b) failed to find any remarkable economic growth associated with 56 IMF and World Bank adjustment loans to Argentina, Cote d’Ivoire and Ghana between 1980 and 1999. Evrensel (2002) found that the macroeconomic situations of recipient countries were worse after involvement in the program, and that the occurrence of moral hazard might be a major cause of program failure. Zwart (2007) claims that support from the IMF can be both positive and negative for recipient countries. On the one hand, financially troubled countries may access liquidity to address their budget problems in the short term and facilitate market functioning. On the other hand, support is always associated with conditionalities. In addition, timing is a key variable. When the IMF and investors act simultaneously, the liquidity effect means that the IMF is consistently successful since the negative signaling effect of the loan is necessarily absent. Similar findings are observed in many other studies (Hardoy, 2003; Nsouli, Mourmouras, & Atoian, 2005). Jorra (2012) concludes that debt crises would become less likely in a world without IMF intervention. Perhaps the inconsistency in the literature is a key reason for the growing interest among researchers investigating the effectiveness of international official lending. This also includes the identification of an appropriate research methodology which to date, remains a significant challenge for researchers in this area. Dreher (2006) summarized the three popular methodological approaches employed in IMF bailout studies. The first approach is to compare the economic performance of bailed-out countries before and after their participation in an IMF program. However, participating countries are not exogenous, and are usually experiencing crises. Therefore, studies are more likely to observe negative findings. In the second approach, researchers employ control countries as external benchmarks to investigate the effectiveness of the IMF program. Ideally, for each program country there should be a control country with which it shares similar economic fundamentals. However, it is difficult to find a perfect match because the economic status of bailed-out countries normally differs greatly from that of non-recipient countries (Santaella, 1996). Even if the control group were carefully chosen according to economic indicators, the most important difference could not be accounted for: the decision to negotiate an IMF program in the first place (Dreher, 2006), which is an endogenous choice. Atoyan and Conway (2005) suggest that control countries be selected based on the probability of their participation in an IMF program. However, time is needed to evaluate the suitability of this approach. The third research approach uses regression analysis to assess the effectiveness of IMF programs, and has been more widely adopted in recent studies. However, this approach only functions effectively if control for the endogeneity of IMF lending variables is taken into account. Steinwand and Stone (2008) argue that sample selection is a fundamental methodological issue in research addressing IMF bailouts. Previous studies ignore the fact that IMF programs and bailed-out countries are not randomly selected. Therefore, it is unfair to blame the IMF when bailed-out countries are vulnerable to financial disaster. In addition, even when IMF programs are ineffective, it is difficult to identify whether that failure is due to the program design, implementation approach or the vulnerabilities of bailed-out countries. Jorra (2012) points out that IMF programs might be detrimental to fiscal solvency if the bailed-out countries are associated with weak economic fundamentals, implying that we can blame either the IMF or the bailed-out countries for the failure of international financial rescue efforts. If it is the IMF’s fault, we need to re-examine the design, conditionality and implementation approach of the IMF rescue package. Otherwise the responsibility lies with debtor countries, due to their poor economic fundamentals. 2.2. Moral hazard Moral hazard poses another major concern within studies in this field. Generally speaking, the term ‘moral hazard’ refers to the situation where in the provision of insurance leads to the insurant taking actions that increase the probability of an adverse outcome (Dreher, 2004). Similarly, Lee and Shin (2008) explain that a person in this situation has less incentive to maintain the insured asset properly, which might increase the probability of undesirable results. As a result, investors and governments treat financial support from international official organizations (such as the IMF or the World Bank) as a form of insurance against adverse shocks. Lee and Shin (2008) argue that repeated financial support from the IMF or World Bank encourages investors to lend excessive amounts to troubled countries with a low interest rate, which does not accurately reflect the underlying risks associated with those countries. In other words, financial support from international organizations actually indirectly encourages investors and governments to behave irresponsibly, which may lead to further future crises. Moral hazard may be further divided into debtor moral hazard and creditor moral hazard. Debtor moral hazard, on the one hand, occurs when debtor countries receive IMF-subsidized loans with interest rates that are much lower than the market rate, which encourages the governments of said countries to adopt irresponsible policies. Creditor moral hazard, on the other hand, suggests that the recurring financial support from the IMF or World Bank provides strong incentive to investors to behave aggressively in the financial market. However, some studies argue that IMF support does not generate serious moral hazard because the IMF bailout package is relatively small compared to the creditors’ investment amount (Mussa, 2004; Jeanne & Zettlemeyer, 2004). Empirical research investigating moral hazard generates a number of difficulties. First, it is difficult to quantify moral hazard, because the excessive risk-taking behavior of creditors and debtors cannot be directly observed and measured. Second, it is difficult to separate the effects of IMF intervention from those of other macroeconomic factors (Lee & Shin, 2008). For example, modern financial crisis can easily spread from one country to another, leading to investor panic or even crisis contagion. As a result, the increased investment risk will offset the reduction of bond spread of bailed-out countries due to the occurrence of moral hazard. Additionally, IMF bailout activities encourage investors and debtors to behave more aggressively, which leads to a radical change in market conditions and country economic fundamentals. In this regard, how to control for important market conditions and country economic fundamentals in empirical studies remains a challenge for researchers. In addition, IMF intervention itself is an endogenous factor that is dependent on the decisions of debtor countries and the IMF, as well as global economic and political circumstances. As a result, it is understandable that we cannot find many empirical studies in this field. Researchers normally employ the change in interest rates and bond spread as a proxy for moral hazard. Therefore, it is logical to assume that IMF intervention will reduce the potential for default among debtors’ and encourage investors’ irrational lending, and therefore reduce the borrowing costs of debtors. Arguably, Zhang (1999) conducted the first empirical study to investigate the moral hazard associated with IMF programs. His study specifically addressed whether the IMF package triggered moral hazard among investors after the Mexican bailout in 1995. However, the relationship between the change in bond spread and the bailout dummy variable was insignificant, implying that the variation of bond spreads was mainly due to the change in international capital market conditions rather than the IMF bailout. Similarly, Kamin (2004), Noy (2004) and Lane and Phillips (2000) failed to find significant empirical evidence to support the presence of moral hazard. Some studies, however, do argue for the occurrence of moral hazard among investors. For example, the empirical findings of Eichengreen and Mody (2001) support the existence of moral hazard, and these authors assert that the IMF rescue program significantly reduces debt countries’ bond spreads and increases the probability of bond issuance. Eichengreen and Mody argue that the IMF program is welcomed by the market, and is viewed as a commitment to reform by debtor countries. Dell’Ariccia et al., 2002 reported that sovereign bond spreads in emerging markets increased dramatically in 1999 and 2000 after the IMF decided not to bailout Russia in 1998, citing the risk of moral hazard. Examining 116 banks from 16 countries for the period July to December 1996, Lau and McInish (2003) identified that IMF bailouts had a positive impact on banks’ market performance in bailed-out countries. Lee and Shin (2008) further confirm the existence of moral hazard by using a dataset covering 18 emerging countries for the period 1998–2000. To separate moral hazard from other factors that influence market spreads, alternative approaches are employed to measure investor moral hazard instead of changes in bond spread. For example, Haldane and Scheibe (2003) used the change in market valuation of creditor banks as a proxy for moral hazard. They found that market valuation of UK banks is positively and significantly associated with large-scale IMF loan packages, suggesting that investor moral hazard does exist, which is consistent with the findings reported by Gai and Taylor (2004). It is worth noting that Mumssen et al. (2013) examined the effects of short- and longer-term IMF engagements and found that longer-term IMF support (at least five years of program engagement per decade) assisted Low-Income Countries (LICs) maintain sustainable economic growth. In addition, short-term IMF engagement through augmentations of existing programs or emergency facilities is associated with a wide range of positive macroeconomic outcomes within LICs. However, the findings are far from conclusive, which is primarily due to the flaws in the research methodologies used in these studies from our perspective. Dreher (2004) argues that using dummies to capture change in the degree of moral hazard is not a suitable approach because one of the key assumptions underpinning this approach is that the economic fundamentals of recipient countries remain steady during the crisis period—which is simply not the case. In addition, the economic fundamentals employed in the empirical analysis are exogenous because their fluctuation largely depends on the availability of IMF funding. Third, the selection of event window for IMF studies is not consistent and very subjective—ranging from a few days to several years. Moreover, the empirical findings of short- and long-term studies are inconsistent. Therefore, short- and long-term moral hazard needs to be further investigated. Fourth, it is worth noting that various studies examine the moral hazard issue by investigating the relationship between IMF bailouts and the political connections of bailed-out countries. In this regard, Barro and Lee (2005) found that the IMF’s lending decisions are highly politically driven. Similarly, Lee and Shin (2008) claim that moral hazard cannot be prevented by the IMF as long as the major shareholders of the IMF, such as the US, are in favor of bailing out countries that are more politically connected. In short, with respect to moral hazard, the empirical evidence is far from conclusive. The mixed empirical findings are primarily due to methodological issues, such as the measure of moral hazard, and the choice of events and event windows. However, Dreher (2004) concluded that IMF bailouts do cause moral hazard among investors because the evidence from stock market studies is consistently positive and significant. Mussa (2004) and Jeanne and Zettlemeyer (2004) pointed out that empirical research in to moral hazard is not meaningful because lowering the borrowing costs of debtor countries is the expected consequence of an IMF bailout, and not proof of moral hazard. Therefore, examining the effects of IMF lending on capital flows or borrowing costs is not an effective strategy to test for IMF-induced moral hazard. In addition, bailed-out countries are expected to run more expansionary policies than countries that have not received support from the IMF. From the perspective of avoiding moral hazard, what matters is whether IMF interest rates are fair in the sense that they cover the risks faced by the IMF. 2.3. Bailout conditionality The IMF provides financial assistance to countries only if they agree to implement a series of economic policy reforms to revive and maintain a sustainable economic growth rate in the long term. Debtor countries are normally reluctant to do so because they need to give up a certain level of solvency autonomy in order to receive external financial support. Typical economic reforms include devaluing currencies, lowering tariffs, encouraging foreign investment, privatizing state-owned enterprises, and reducing expenditure on the public sector. It is fair to say that these policy reforms are mainly free-market oriented.

Recently, the IMF was criticized for forcing recipient countries to take on policy reforms without considering the difference in economic status, business environment and culture among these countries. In addition, the tough austerity package attached to bailout funds has implications for leadership at the highest level and forces governments in recipient countries to sacrifice policy autonomy, cut public spending, increase tax and retrench staff, in order to return budgets to surplus in the short term. Unfortunately, these policy reforms often lead to inactive business investment, poorer government service, severe social instability and a higher unemployment rate—all of which may damage the economic development of bailed-out countries in the long term. For example, the IMF has been criticized for being one of the major causes of the recent Ebola outbreak in Africa, because its policy of prioritizing debt repayment over domestic spending has weakened the public health infrastructure in Sierra Leone, Guinea and Liberia who were hit hardest by the epidemic. This had direct implications for the coordination of health services across these countries, including a lack of effective communication coordination and information management. Furthermore, the enforced policy reform is criticized for being a ‘one-size-fits-all’ approach that lacks flexibility, and fails to acknowledge the significance of context such as local economic conditions, cultures and business environments in these countries.

Empirical research into conditionality normally investigates the effectiveness of IMF bailouts from functionalist, structural and public choice perspectives (Steinwand & Stone, 2008). From a functionalist perspective, conditionality is necessary because it forces debtor countries to adopt prudent economic policies to achieve the desired effects of the IMF program. However, it is observed that recipient governments may not be willing to follow the bailout conditions, and the IMF may threaten to cut off aid if recipient governments fail to cooperate. Therefore, Scholl (2009) argued, to achieve the desired bailout outcomes, self-enforcing conditional aid strongly stimulates the economy of recipient countries. However, Dreher and Walter (2010) claimed that the conditionality of IMF loans has no impact on the outcome of IMF intervention. In determining how to rescue bailed-out countries, structural views represent the interests of the IMF’s major shareholders particularly in the US. This approach suggests that political connections play a critical role in fund allocation and conditionality. For example, Presbitero and Zazzaro (2012) concluded that political similarity with G7 countries is positively correlated with the probability of entering a loan agreement. In addition, the harsher the crisis and the exposure of foreign banks in the country, the larger will be the size of the IMF bailout. Similarly, in their investigation of 314 IMF arrangements with 101 countries over the 1992–2008 period, Dreher, Sturm, and Vreel (2015) identified temporary membership on the United Nations (UN)Security Council as representative of a country’s political importance. Specifically, that such country receives softer treatment from the IMF when negotiating bailout conditions. In return, major IMF shareholders, such as the US and major European countries, may exert more political influence over the Security Council. From a public choice perspective, conditionality serves the institutional self-interests of IMF staff. For example, Dreher (2004) argues that the conditionality associated with IMF and World Bank loans gradually increased and became inseparable. The major objective of conditionality is to promote economic growth and reduce poverty yet bailed-out countries prefer to minimize conditionality. However, in reality the IMF normally has a stronger bargaining position. Stone (2008) reports that conditionality varies widely, and the IMF would like to maximize the scope of conditionality when countries are most in need of it said. Even when the conditions attached to IMF bailouts sound perfect, unfortunately their effects are often negative. Dreher and Vaubel (2004) found that the number of conditions are negatively associated with international reserves and positively associated with interest rates in the world capital market and monetary expansion in the borrowing market. However, overall the effect of conditionality was not found to be significant in their study. Even if the conditions of an IMF loan are well designed, the effectiveness of their enforcement may be problematic. Lack of effective enforcement of conditionality can be viewed as one of the major reasons for the failure of bailouts, and may be attributed to the political pressure exerted by major member countries. For example, Stone (2004) argued that the IMF never seriously punishes countries that do not cooperate with bailout conditions if these countries are political allies of the US. In a similar vein, Kilby (2009) found that it is difficult for the World Bank to impose strict structural adjustment conditionality on countries that are friendly with the US. Similar findings are reported by Stone (2008) and Dreher, Jan-Egbert, and Vreel (2009). Recently, performance-based aid was proposed as an alternative to the failed traditional conditionality approach. This would entail the IMF or World Bank, instead of committing fixed amounts of aid on a country-by-country basis, linking ‘the allocation and disbursement decision by committing the aggregate amount to a group of countries, but where the actual amount disbursed to each individual country depends on its relative performance’ (Svensson, 2003:384). The fundamental objective of this approach would be to strategically improve the overall effectiveness of the aid provided by international organizations. In addition, the IMF and World Bank could choose when and which country to assist based on favorable economic conditions for a bailout. Furthermore, competition among recipient countries might result in an overall improvement in the conditions in terms of supporting an effective use of aid (Öhler, Nummenkamp, & Dreher, 2012). This approach sounds idealin theory. However, empirical evidence of its effectiveness remains limited. For example, Scholl (2009) claimed that self-enforcing conditional aid strongly stimulates economic development by substantially increasing welfare in recipient countries. However, assessing the effectiveness of self-enforcing conditional aid is costly, particularly in ensuring enforceability of less benevolent political regimes which receive large aid funds in return for less stringent conditions. Öhler et al. (2012) found that the incentive to cooperate among recipient countries gradually weakens overtime when the timing and magnitude of aid are uncertain. In short, the effectiveness of bailout conditionality is clear, and only 20% of loans were repaid in full in the period 2005–2009, based on are port published by the Development Assistance Committee of the Organization for Economic Co-operation and Development (OECD) (Öhler et al., 2012). In addition, as mentioned above, conditionality has multiple objectives rather than being purely economically driven. Vreeland (2006) and Dreher (2009) argued that IMF compliance is not straightforward because IMF agreements span many dimensions, which vary from agreement to agreement. Therefore, a new research methodology is required to clarify the issue. Furthermore, the IMF has never comprehensively reported on the non-compliance of recipient governments. Instead, it frequently waives its program obligations. Consequently, debtor countries have no motivation to implement the predetermined economic reforms or fulfill the conditions of their aid (Svensson, 2003). Thus, as Heckelman and Knack (2008) concluded, such aid may even slow policy reform. 2.4. Leadership and corporate governance Globalization creates opportunities or challenges for countries, depending on their economic status. Leaders and policy-makers, through corporate governance, seek to adopt structures and institutions that promote economic and social dynamism (Weber, Davis, & Lounsbury, 2009). Leadership and corporate governance are intertwined in terms of their influence on accountability and regulation. The knowledge that leaders possess and disseminate to their boards is viewed as a key element in any country’s development and learning (Ellerman, 1999). This is due to the fact that leadership extends beyond policy and is embedded in the engagement between the state and its agencies, and in turn between the state and the population (Mayosi et al., 2012). Countries that come to the rescue of less fortunate countries via the IMF often do not have a good understanding of the recipient country’s status or the purpose of the IMF bailout package. In this regard, the characteristics of leadership are specific to each country’s context and hence corporate governance policy, procedure and practice. While the leadership literature is extensive, the corporate governance literature is limited in terms of an understanding of the governance structures and systems that enhance optimal organizational performance (Daily, Dalton, & Cannella, 2003). To some extent, the role of corporate governance in financial markets is well documented (Shleifer & Vishny, 1997; La Porta, Lopez-de-Silanes, Shleifer, & Vishny, 1998, 2000). The key objective of corporate governance is to provide good returns to investors on their financial investments (Shleifer & Vishny, 1997). The legal protection of investor rights is considered to be one of the key priorities within corporate governance, and countries with good corporate governance systems usually provide better protection to investors (La Porta et al., 2000). Drawing on financial crisis studies, Johnson, Boone, Breach, and Friedman (2000) argue that poor corporate governance had a significant effect on the extent of currency depreciation and stock market declines during the Asian Financial Crisis (AFC). Their findings indicate that countries with weak legal protection of shareholder rights and poor enforcement are more susceptible to a fall in asset values and a collapse of the exchange rate. The notion that a weak corporate governance system was one of the major causes of the AFC is supported by Eiteman, Stonehill, and Moffett (2001). The failures and weaknesses of corporate governance arrangements constitute one of the major causes of the 2008 Global Financial Crisis (GFC), as the existing corporate governance mechanisms failed to safeguard investors’ interests against excessive risk-taking in a number of financial services companies (Kirkpatrick, 2009). Financial firms with dominating shareholders performed worse during the 2007–2008 financial crisis (Erkens, Hung, & Matos, 2012), yet banks with sound risk management structure performed better during this crisis (Aebi, Gabriele, & Schmid, 2012). In relation to the country-level studies, Li and Moosa (2015) claim that countries with weak governance systems are more likely to be associated with greater operational losses in terms of both frequency and severity. It is argued that corporate governance systems serve as an effective enforcement tool for bailed-out countries to restore their economies and financial markets after bailouts. Countries with leadership evidenced in good corporate governance systems are more likely to recover from an economic crisis. In addition, IMF package recipient countries are required to implement a series of economic reforms in exchange for external financial assistance. The reforms attached to IMF packages normally include improving government efficiency and accountability, combatting corruption and privatizing state-owned enterprises, which leads to corporate governance reform. The dynamic change in the corporate governance system of recipient countries inevitably plays an important role in the bailout process. Empirical studies investigating the effect of corporate governance on the success of IMF bailouts are limited. Only a few address one or two corporate governance variables, and seek to identify the link between corporate governance variables and the outcome of bailouts, instead of examining the overall impact of the corporate governance system. For example, Dreher (2006) identifies that a lower level of democracy and political stability actually increases the probability of a country requesting an IMF loan. In addition, he revealed that countries with an accountable legal system have a better chance of receiving larger IMF loans, and a lower probability of program suspension. Similarly, political instability is negatively associated with IMF loan approval and loan size (Lee & Shin, 2008). Additionally, Jorra (2012) finds that a high level of parliamentary democracy is negatively and significantly associated with the probability of sovereign default, implying that the general openness of political institutions has a significant impact on the effect of IMF bailouts. In contrast, Dreher and Gassebner (2012) found that countries with high levels of democracy are more likely to experience major government crises because parties in such systems can readily express their opinion on controversial policies and events, which may trigger a crisis. Corruption is one of the major barriers to the effectiveness of external aid, and recipient countries’ incentive to fight corruption is a key factor driving the success of bailouts (Öhler et al., 2012). The importance of corporate governance to a country’s economic development is well documented in the literature. Therefore, we argue that the quality of corporate governance and the improvement in corporate governance systems, in particular, play important roles in determining the success of IMF bailouts. In addition, the implementation approach taken by the IMF needs to be further investigated, such as key persons involved in designing and implementing IMF bailouts, fund allocation channels, and the approach taken to combating corruption.

From the perspective of cultural theory, while the goals of the IMF and a recipient country may be similar, their respective interpretations of these may differ. The IMF would do well to adopt a cultural approach to management by seeking to understand each recipient country’s dominant culture. This is referred to as an ‘ambicultural’ approach to leadership and management, and provides a model for bridging cultures and organizations so that they may interact more effectively (Jer Chen & Miller, 2010). This model is increasingly having an influence on the mindset of IMF leadership across the globe, and increasingly being put into practice, evidenced in the organization’s greater consideration of the dominant values, attitudes and beliefs of recipient countries. This is resulting in superior models of governance, leadership and administration between the giving and recipient countries (Jer Chen & Miller, 2010), thus enhancing sustainable practices of mentorship, support and ultimately independence for the recipient country. 2.5. Financial and economic engineering To date, borrowed funds are being used by penniless nations to bail out other penniless nations. The IMF obtains money from numerous nations that are in major debt themselves. To illustrate, the five largest contributors to the IMF are the US (16.75%), Japan (6.23%), Germany (5.81%), France (4.29%), and the UK (4.29%); yet it is well known that these countries are all experiencing major financial economic issues themselves. For example, the US has a debt-to-GDP ratio of over 100%, and Japan is associated with a significant debt-to-GDP ratio of over 200%. Thus, it is evident that these countries are funding the IMF with borrowed money. For decades, the IMF used money as a way to force developing nations to do what it wanted them to do. However, prior to 2009, this had mostly only been carried out among poor nations. But now an increasing number of previously wealthy nations are turning to the IMF for assistance. For example, in recent years we have seen Greece, Portugal, Ireland and Cyprus receiving bailouts that were partly funded by the IMF with Spain receiving a bailout for its banking sector. So what happens when the contributors run out of money and are no longer able to contribute? For how long can this situation continue before the entire system collapses? We need to find new ways and approaches to fund IMF bailouts.

As discussed above, doubt is cast on the efficiency and effectiveness of the IMF in managing international financial crises. To date, the empirical results of IMF bailout studies cannot provide conclusive findings on this issue. In addition, prominent economists such as Joseph Stiglitz and Jeffrey Sachs have publicly questioned the appropriateness of both the problem diagnosis and the assistance that programs provide, going so far as to charge the IMF with making the crises worse, deeper and longer than might otherwise have been the case.

The debate surrounding reforming the international financial architecture has attracted the media’s attention in recent years, particularly as previous financial rescue decisions have often been rushed and made without careful or constructive design. One notable example of an alternative to the bailout is the proposal for an international bankruptcy regime. Krueger (2001) claims that a new treaty is required to provide some bankruptcy-style protection to sovereign debtors. Stiglitz (2002) proposes the creation of a system similar to the Chapter 11 (US bankruptcy code 11) regime, to facilitate an across-the-board restructuring of private borrowers’ debts in the event of macroeconomic shocks. Sachs, Tornell, and Velasco (1995), Sachs (1998), Sachs, Radelet, Cooper, and Bosworth (1998), and Fisher (1999) argued that the IMF requires placing enough money on the table to ensure that it can stop capital flight from financially stressed countries. Others have suggested new binding rules to substantially scale back the amount of funds the IMF can provide to countries facing crises. The Meltzer Commission (also known as the International Financial Institution Advisory Committee—IFIAC, 2000) suggests that the IMF should exit the business of lending to countries that discover macroeconomic virtue only when they are close to default. Instead it ought only to lend large sums to countries with good policies that qualify in advance for extra protection—assuming that such policies could be defined. Lerrick, 2000 propose that the IMF should support the secondary market for a country’s sovereign bonds rather than lend directly to the country. However, to date, these calls for major reform have not significantly changed the international financial system. We witnessed the IMF bailout failure in Greece, and how its proposals failed to address the real underlying causes of the Greek crisis. Currently many of the IMF solutions have been impractical or inappropriate in resolving financial crises as they are unable to address essential factors such as culture and the economic and financial structures that are often specific to each country. To reiterate, IMF programs comprise three inseparable components – financing packages, structural reforms and macroeconomic policies – within a single offer of assistance. In return for IMF financial assistance, the bailed-out countries commit to the reforms known as structural adjustment policies or programs (SAPs). These policies include, but are not limited to, increasing exports, reducing domestic demand, placing constraints on government spending, and encouraging privatization. Another broad view of SAPs describes the policies as involving a combination of short-run measures aimed at stabilization, and long-run structural reforms aimed at transforming heavily controlled economies into market economies. For example, IMF support normally includes privatizing industries and credit control, raising real interest rates, decreasing or ending subsidization, lowering tariffs and increasing imports, tightening fiscal policy (at least initially), opening up financial markets to foreigners, closing troubled banks and financial institutions, and undertaking a range of other structural reforms.

However, we observe many unsuccessful IMF-supported programs (in Greece and Indonesia, for example), where bailed-out countries have experienced severe capital outflows and currency depreciations, even after the programs were implemented. Un-successful results are due to a variety of factors, including the initial hesitation and policy reversals in program implementation. Examples are premature rollbacks of monetary tightening, and political uncertainties that cast doubt on prospective policies (as in the recent case of Greece). In addition, the overwhelming imbalances between reserves and maturing short-term debt are major contributing factors to market uncertainties over the IMF financing packages. Some bailed-out countries (such as Greece) have experienced much deeper recessions than projected, reflected mainly in a collapse in domestic spending, especially private investment. Greece underwent enormous current account adjustments, associated mainly with sharp drops in imports.

Here we make an argument for alternative solutions based on financial and economic engineering that address not only the country’s specific economic and financial structure but also its aspects of culture. Some of these innovations, which we designate here as financial and economic engineering, could lead to strong output growth generated by increasing private consumption, exports and new private investment. Furthermore, cutting inefficient infrastructure projects and public expenses, reforming the tax system and fighting corruption will all be critical to the success of bailouts and economic reform.

In addition, it is necessary for financially stressed countries to return their current accounts to surplus by reducing unnecessary imports and boosting trade surpluses. Implementing appropriate measures to increase international reserves will make a country less vulnerable to external shocks, which will eventually enhance financial market confidence. By preserving social stability through targeted subsidies, education and health programs, and employment creation, the risk of financial stress can be reduced. Finally, we believe that, by implementing certain strategic structural reforms such as closing down weak banks and other financial institutions, merging or restructuring debt, improving loan recovery, easing foreign ownership restrictions, and establishing higher standards of governance, such approaches to financial and economic engineering will assist a country such as Greece to achieve economic and financial prosperity.

2.6. Developing a bailout model Based on the bailout literature, the following theoretical model is presented which identifies the connections among aspects of bailouts implemented by internationally recognized bodies and organizations. A typical IMF bailout process can be subdivided into four key stages, which are presented in Fig. 1. The first stage represents a situation of crisis around whether the government of a financially troubled country should seek assistance from international official organizations, and the potential outcomes associated with different decisions. The second stage is focused on whether international official organizations, such as the IMF or World Bank, agree to provide assistance after receiving a bailout request, and whether the country agrees to accept the rescue package (funds and conditionality) offered. It is clear that the government of the troubled country can reject the rescue package, as Malaysia did during the AFC. If two parties reach a deal, then the third stage of the bailout process commences. This stage involves fund injection and policy implementation imposed by the IMF or World Bank, which can be influenced by many macroeconomic and financial factors that have a direct impact on the economic outcome of bailouts. The fourth and final step in the process includes a review of the bailout. A typical IMF bailout process: a ‘spiral of doom’ Download full-size image Fig. 1. A typical IMF bailout process: a ‘spiral of doom’. Realistic questions to ask about bailout activities are concerned with whether a country is willing to request assistance from the IMF/World Bank, and whether the IMF/World Bank agrees to issue loans to the financially troubled country. The answer to the first question (Q1) is based on an endogenous choice by the government, because the decision primarily depends on the degree of that government’s resilience. In such cases, a government realizes that it needs to give up a certain level of solvency autonomy in exchange for funding from the IMF or World Bank, which inevitably leads to an uncomfortable government situation. If a government is confident in being able to manage its problems alone, it will not seek assistance from international financial organizations, and internally driven economic reform will be conducted instead. In contrast, it can be expected that a government will request assistance from the IMF when all other options are exhausted, implying that this government is nearing default in terms of its financial situation. Once a country decides to seek assistance from the IMF, the first stage of the bailout process is completed.

The second stage depends on whether the IMF or World Bank will choose to provide assistance to the troubled country (Q2). The lending decision is complicated, and depends on the country’s current financial and economic fundamentals, its political connection to these international organizations, how closely its economy is engaged with the rest of the world, and the depth of foreign creditors involvement in the crisis (Barro & Lee, 2005; Lee & Shin, 2008). If the IMF or World Bank decides to decline the request, the market will react negatively and immediately. However, such an immediate rejection does not occur often due to the globalization of financial markets. What will most likely occur is that the IMF or World Bank will agree to rescue the country. However, the conditions will be determined after a careful due diligence investigation of the country’s economic and financial fundamentals is conducted. This will, automatically trigger a negotiation process between the financial organization and the country. At this point, the country must decide whether it should accept the rescue package, and the associated negotiation process can be time consuming and tedious. A typical example is the case of Malaysia during the AFC. The Malaysian Government rejected the assistance and advice provided by the IMF. Consequently, it conducted a series of economic and financial reforms on its own initiative, such as tightening capital control and devaluing the local currency. In addition, the Malaysian Government increased government spending, in opposition to IMF policies. As a result of these measures, Malaysia suffered less severe economic challenges than did other countries embroiled in the AFC (Billington, 2004). More recently, the Greek Treasury bond yield is highly dependent on whether the IMF and the ECB provide further financial assistance to the Greek Government. The re-elected Greek Government has demanded a debt reduction, implying that Greece’s nation-state creditors must write down and cover the investment losses by themselves. The EU and the ECB argue that treaties and agreements made with previous Greek governments should be honored. The re-elected leaders of the Greek Government argue that past agreements have only caused suffering and hardship for the Greek people due to the tough austerity package attached to these previous treaties and agreements. As expected, the market reacted negatively to the tension generated between Greece and its euro zone partners during their debt negotiations, and the situation stirred up anxiety about the solvency of Greek banks and fears that Greece might exit the euro zone bloc.

There is a unanimous agreement that Greece requires debt restructuring as it is impossible for the Greek government to service its debt as the bailout is designed to fail (Manasse, 2015). It is difficult to enter into re-negotiations with its creditors again without a convincing structural reform plan in advance, which leads to a dilemma. A realistic solution could be that Greece deals with an improved debt serving program specifically on lower borrowing cost, and longer terms of maturities. Principal reduction can be avoided in order to maximize creditors’ interests (Taylor, 2015). The effect of this new plan may avoid new market uncertainties, and enable Greece to pronounce a solution to its debt sustainability problem, which would eventually boost market confidence and reverse capital flows as the country implements its structural adjustment debt repay program overseen by an impartial body, such as IMF. Alternatively, the solutions employed by the Malaysian Government during the AFC are worthy of consideration. Major reform policies employed by the Malaysian Government included devaluing the local currency, creating asset management companies, and tightening capital flow to stimulate the economic growth. However, not all approaches are practicable for the Greek Government. For example, it is impossible for the Greek Government to devalue the Euro because the monetary policies of ECB members are actually decided by ECB. If Greece adopts the Malaysian solutions, then Greece’s exit from the Euro zone would be highly anticipated, leading to an inevitable contagion effect. An alternative solution is for the IMF, EU, ECB or World Bank to agree to issue a special rescue loan to Greece. In this scenario, the probability of default would be reduced due to the liquidity injection from recognized international organizations (Lau & McInish, 2003). Once the international official organizations agree to issue special loans to a particular country (the second stage), the third stage commences. The ultimate objectives of a bailout are to return the public sector budget to surplus in the short term and maintain sustainable economic growth in the long term. However, it has been widely observed that there are many factors that influence the bailout outcomes. For example, there is significant evidence in the literature on the impact of bailout conditionality and moral hazard. As discussed above, the design and enforcement of bailout conditionality mainly depend on the bailed-out country’s economic fundamentals, and its political relationship to international official organizations and to the key members of the IMF. However, the effects of bailout conditionality are generally disappointing due to the conflicts of interest between international financial institutions and major member countries (Öhler et al., 2012). On the one hand, countries can easily access the funds from international financial institutions if they are politically closely related to major member countries, and lax enforcement of conditionality can be expected due to such political connections. Similarly, Stone (2004) finds that countries that are politically important to the US receive lesser punishment if they do not comply with IMF bailout conditions. In relation to moral hazard, the empirical findings of previous studies are inconsistent—mainly attributed to issues associated with research design and methodology. Furthermore, the significance of the moral hazard phenomenon has been challenged. Mussa (2004) and Jeanne and Zettlemeyer (2004) observed that bailed-out countries tend to have lower borrowing costs and to adopt more aggressive economic policies after receiving financial assistance from international financial organizations. To avoid moral hazard, it is important that the loan interest rates reflect the underlying risks associated with those countries and the risk faced by the IMF. Traditionally more attention is paid to the relationship between bailout outcome and corporate governance and leadership quality. The literature shows that countries with good corporate governance and leadership are more likely to maintain sustainable economic growth. La Porta, Lopez-de-Silanes, Shleifer, and Vishny (1997) and La Porta et al. (1998) state that countries with good legal and corporate governance systems provide better shareholder protection, which therefore leads to more valuable stock markets, larger numbers of listed securities per capita, and a higher rate of initial public offerings than is the case in less protected countries. Moreover, La Porta et al. (2000) claim that a good investor protection system may benefit the growth of the real economy. In terms of financial bailout activities, the economic reforms to which bailed-out countries must commit automatically trigger corporate governance reform, leading to an economic and financial system with better efficiency, accountability and functions. Financial engineering is another aspect of the financial support provided by international official organizations. Problems related to financial engineering include: (1) how the organizations can effectively collect the principal of bailout loans from bailed-out countries; and (2) how the financial health of these organizations can be maintained. Empirical results show that, based on the OECD record, the majority proportion of loans are never repaid. Therefore, it is safe to conclude that the design, implementation and enforcement of rescue loans in their current form are unsustainable. Such rescue packages need to be fundamentally reconstructed. And as a consequence of the failure of loan repayment, these organizations will likely be more cautious with their future lending decisions, which will indirectly reduce the efficiency of the rescue process. In this regard, the current situation facing Greece and its creditors is a typical example. This prolongs the decision-making process and increases market uncertainty for investors. In addition, as mentioned above, the major member countries of the IMF and World Bank are financially distressed. Thus the financial stability of these international organizations is becoming increasingly uncertain.

The fourth and final stage of the bailout process is the performance review of the bailout based on macroeconomics and financial market performance, and the loans repayment process of bailed-out countries. If the desired economic performance is reached, then officially international official organizations will cease further assistance, and the country will again be fully controlled by its own government. However, as revealed in the above discussion, the overall effectiveness of bailouts is not promising, which triggers another question for these international official organizations, around whether to rescue the country again even if it does not achieve the desired economic outcomes.

It should be noted that the economic performance of bailed-out countries does not appear to significantly influence the lending decisions of international financial institutions. On the one hand, if these institutions reject a request for assistance, the markets in general react negatively in the short term due to the increased economic and financial uncertainty surrounding the country. However, such a response has been rare in recent years due to the integration of global financial markets. On the other hand, the markets will react positively in the short term when international financial institutions agree to provide financial assistance to such countries. However, as demonstrated above, the effectiveness of bailouts in the long term is dubitable and thus these financially troubled countries will be worse off either way.

2.7. Alternative financial engineering solutions to bailouts As claimed by the IMF, its bailout programs are aimed at tackling the root causes of a country’s financial problems and restoring investor confidence, thereby strengthening financial systems, improving governance and transparency, restoring economic competitiveness, and modernizing the legal and regulatory environment. And these programs often do far more than address the major fiscal, monetary and trading balances. More importantly, as a condition for the receipt of IMF loans, recipient countries must comply with the strategies of the IMF which are based on two key postulates: the need to reform economies, with a particular emphasis on fiscal discipline and banking sector restructuring; and the requirement to maintain high interest rates to avoid capital outflows and currency crises.

However, on numerous occasions we have observed that the high interest rates prescribed by the IMF to limit currency depreciation have had severe repercussions for the economies of Asian countries. For example, during the 1998 AFC, interest rate hikes were not effective in slowing down currency depreciation, but rather worsened the extent of the crisis by leading to widespread banking and corporate bankruptcies. In Indonesia the fiscal policy requirements included in the IMF package proved to be unnecessary and even harmful; excessive fiscal discipline made the crisis-induced recession worse.

The effects of these policies are described in terms of a vicious circle: the credit crunch imparted severe financial losses to otherwise solvent companies; and the widespread fall in profitability translated into higher levels of non-performing loans and credit risk, exacerbating the crisis-induced recession, in turn, causing a further contraction in the supply of credit as commercial banks needlessly sought to tighten credit conditions on new loans and limit business activity—all of which deepened the crisis and destabilized the economies. In light of the above findings, it is timely to propose a set of financial engineering solutions that may assist the management of sovereign financial and economic crisis without the aid of the IMF. We outline a number of financial engineering solutions below.

2.7.1. Proposed bank liability guarantee scheme The primary purpose of this scheme would be for the country to guarantee the liabilities of banks, which would have an immediate effect of restoring confidence in banks and preventing capital flights and liquidity crisis. This is a preferable solution to the IMF closing insolvent banks, as it would assist stabilizing the banking system during a crisis period. However, one unfortunate short-term consequence would be an increase in the sovereign debt burden.

2.7.2. Proposed bank recapitalizations and nationalizations This provides an additional medium- to long-term solution to prevent bank solvency crisis. Historically, many countries, such as the US and the UK, have used common shares, preferred shares and other hybrid instruments such as convertible preference shares to restore bank solvency. This approach could promote national economic growth as the credit market revives and stimulates economic expansion through loans to various enterprises. However, a drawback of this strategy would result in an increase of public debt.

2.7.3. Establishment of an asset management company This would be a powerful solution to quickly ensure the financial stability of banks by either removing the impaired assets to an asset management company or insuring against losses. The new Asset Management Company could be created to buy up the nonperforming loans of commercial banks at written-down values and then sell them off once the debts were recovered. The bad loan bank would eventually need billions of dollars to buy up the loans, and this loan buying would be financed by a mix of zero coupon bond issues with government guarantees and funds from the private sector. This process of bond for loan exchange is the most efficient bailout solution because it could stimulate economic growth much faster than other financial engineering solutions. This process has the advantage of quickly stabilizing bank balance sheets and restoring confidence in the banking system. However, the public debt would eventually be increased. A typical example of this solution was seen in Malaysia’s reaction to the AFC. A down side of this approach is that it could lead to overpayment to buy bad assets if the process were not managed adequately. Once the economy was recovered, the bad assets would increase in value, making the debt repayment much easier and thus maintaining orderly financial and banking sectors.

2.7.4. Proposed liquidity support scheme The aim of this scheme would be to improve market liquidity in public and private debt securities, allowing banks to continue their lending activities which would stimulate economic expansion and would help not only to lower and stabilize sovereign bond yields but also to finance budgetary and debt repayment needs in the short term. Various instruments could be used such as a Covered Bond Purchase Program, to be designated in buying eligible covered bonds from banks in the primary and secondary markets. In addition, a Securities Market Program could be established, which would allow for the purchase of eligible bonds issued by various governments and public entities (secondary market) and private entities (primary and secondary markets). Another instrument could be provided through Long-Term Refinancing Operations, which would be long-term credit (up to three years) provided on the basis of collateral. Finally, Emergency Liquidity Assistance could provide a credit line as emergency funds to banks unable to put up acceptable collateral to various lenders for regular refinancing.

2.7.5. Bailout program This traditional solution could be solicited by asking the IMF and other international financial institutions and organizations for loans to help finance a country’s budget deficit, debt repayments and bank recapitalizations. However, bailouts are normally conditional on the implementation of large austerity programs which may assist governments via budgetary support, and can indeed avert sovereign debt defaults and insolvency, but prudent and fair negotiations must be undertaken to ensure a successful outcome that leads to economic growth.

Austerity package soften delay economic growth, and engender social unrest and political instability, as witnessed with the latest austerity measures imposed on Greece by the IMF, the ECB and the EU. It is clear that large budgetary adjustments implemented in a short time span are not feasible and in fact can pose a serious risk to a country’s financial health.

2.7.6. Proposed debt restructuring program and implementation The primary objective of this solution would be to reduce the troubled country’s debt burden through debt reduction and restructuring. It entails a process that allows a sovereign entity facing cash flow problems and financial distress to reduce or renegotiate its delinquent debts in order to improve or restore its liquidity. If a country’s liquid assets and available financing are insufficient to meet or rollover its maturing obligations, this solution could restore market confidence. The debt restructuring would typically involve the rescheduling of maturing obligations. Alternatively, it might involve a reduction in the debt stock and the question of whether a sovereign country’s debt is sustainable becomes more relevant when a significant amount of fund financing is sought.

In February 2012, Greece launched the largest sovereign debt restructuring in history, covering Euro 205 billion in debt. Additionally, the Euro group of euro-zone finance ministers agreed to provide rescue funding to Greece up to Euro 86 billion over the next three years since August 2015. Other sovereign debt restructurings have also recently taken place, including in Belize (2007, 2013), Jamaica (2010, 2013), and St. Kitts and Nevis (2012). Debt restructurings have often been too little and too late, thus failing to re-establish debt sustainability and market access in a durable way. The debt restructuring process can be executed through the implementation of a debt swap via the exchange of old bonds for new bonds, with favorable terms that allow for lower interest rate and longer maturity, thereby allowing troubled economies to avoid defaulting in the near future. Greece is currently engaging in this process again, in seeking to reduce its old debt interest burden. In addition, the ‘haircut’, which provides a significant reduction in the face value of an old debt, is another technique that may be implemented in debt restructuring. However, convincing investors to accept the debt reduction can be challenging. Yet, unquestionably, this process would reduce the debt burden where private investors rather than taxpayers or public investors would experience losses.

2.7.7. The need for structural reforms and implementation A reasonable approach to fighting the economic, financial and sovereign debt crisis can be described as a combination of fiscal consolidation, financial sector stabilization, and profound structural reform in the labor and product markets. Immediate action to strengthen government finances and stabilize the financial system is necessary in the midst of any crisis, to avoid further instability and contagion. The primary objective of this solution would be to address impediments to the fundamental drivers of growth by unshackling labor, product and service markets to foster job creation, investment and productivity. Moreover, this approach would enhance an economy’s competitiveness, growth potential and adjustment capacity. There are many ways to establish successful structures that create long and sustainable economic growth, job creation and reduce social unrest. The seven key techniques are summarized below.

Technique 1: Implement financial sector reforms with bank recapitalization, deleveraging, prudential capital requirements, the reorganization and downsizing of the banking sector, bank resolution regime, and the strengthening of banking regulations and supervision. Technique 2: Develop entitlement reforms aimed at curtailing entitlements and selected social security benefits. Technique 3: Develop labor market reforms that reduce the minimum wage for a limited period of time, and reform unemployment benefits in response to current economic conditions. Technique 4: Operationalize pension reforms by increasing the state pension age progressively and curtailing early retirement. Technique 5: Implement public administration reforms to modernize public administration with the use of the latest technology to reduce inefficiency. Technique 6: Increase competition in the non-tradable sectors such as electricity, transportation, and telecommunications, as well as sheltered sectors such as legal, medical and pharmacy. Technique 7: Initiate the privatization of government-owned enterprises. These techniques will result in adjustments that address the root causes of fiscal crisis, and increase competitiveness and growth; however, such a strategy will only yield positive results in the long term.

2.7.8. Implementation of stronger banking supervision and risk management The primary goal of this solution would be to create a stronger banking risk management framework to enhance supervision, improve depositor protection and minimize systemic risks. Strict rules will help to prevent bank crises in the first place. And if banks do end up in difficulty, a common framework may be established to manage the process, including a means to wind them down in an orderly way. One of the key components would be to harmonize the deposit guarantee system and establish a credit bureau for the management of potential nonperforming loans that could lead to severe financial crisis. As a result of these initiatives, the occurrence and magnitude of bank failures would be reduced, the protection of deposits would provide greater confidence and stability, the country’s outstanding credit could be better managed via timely decisions, and sovereign countries would be less exposed to bank bailout costs.

Stronger supervision would ensure effective enforcement of prudential requirements for banks, requiring them to maintain sufficient capital reserves and liquidity. Sovereign country banks would therefore be more solid, and their capacity to adequately manage risks linked to their activities and to absorb losses would be strengthened.

It should be noted that the various financial engineering solutions outlined above should be selected based on certain variables, such as the nature of the crisis, the country’s financial and economic structure, the political situation and the state of the global economy. This study set out to determine whether the IMF bailout process contributes to a recipient country’s financial recovery and ongoing stability. Through an extensive high level review and analysis of the IMF literature, which informed the development of our Spiral of Doom Model, the evidence indicates that the IMF is no longer viable, and nor is it sustainable in today’s political, cultural and economic global climate. This finding has significant implications for understanding how countries may develop and implement various techniques and strategies to ensure their sound financial and economic standing in the long term.

3. Conclusion This is the first study to provide a comprehensive review and analysis of research that addresses IMF bailout programs and makes several noteworthy contributions to the IMF literature by providing a new understanding of the IMF bailout process. This study is thereby particularly valuable to countries that are seeking techniques to stabilize and strengthen their financial standing. Little previous research examines the cumulative elements influencing IMF bailouts. And our findings indicate that the fragmented literature is far from conclusive on the subject of the effectiveness of IMF bailouts. The mixed results of empirical studies in this area are primarily due to methodological problems, choice of events and variables, and data availability. The design and conditionality of IMF programs vary from one country to another, and it is therefore difficult for researchers to conduct convincing IMF comparison studies. The contribution of the present empirical study is the consolidation of the literature in the development of our IMF ‘Spiral of Doom’ framework. A second contribution of this study lies in our proposed techniques and strategies that a country might implement in pursuit of financial and economic stability. The implementation of policy reforms needs to be further investigated, such as the interplay between the key factors of moral hazard, bailout conditionality, corporate governance, financial engineering, leadership and other economic variables. Furthermore, leadership is identified as a key driver of governance, change and innovation, and it is imperative to address the dignity of all citizens residing in IMF program recipient countries.

We acknowledge that the recommendations identified in the “Alternative Financial Engineering Solutions to Bailouts” section require resources in terms of time and money. What requires implementing immediately are quick, efficient, and cost effective solutions to enhance the stability and confidence of domestically and internationally financial systems. Some may view these implementations as highly challenging due to the complexity of global financial and economic system thus they may assert that it is not timely to consider any “grand” reform or significant revision in international or multilateral structures. Turning to the financial aspects, the Greek debt crisis has yet to be resolved, as does the recent Syrian refugee crisis which has imposed further financial burdens on many countries which already experience financial distresses. The financial cost of host countries accepting millions of refugees has yet to be determined. We have not observed any constructive agreements or plans between European countries, including Greece, on how to jointly deal with the Syrian refugee crisis, which would impose further financial burden on Greece recovery.

Further research is required to enhance understanding of the effectiveness of the aid provided by international official organizations such as the IMF and World Bank, in particular. Questions that are worthy pursuing and investigating include: What is the optimal research methodology for measuring the effectiveness of IMF/World Bank bailouts? What is the impact of corporate governance on the success of bailouts? Are studies on moral hazard meaningful? What is the optimal structure of bailout conditionality? How can the financial support required for bailouts be secured in the long term? Future research would further the consolidation of the IMF literature and in turn, potentially impact on bailout policy.

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How do I know if my rehab is licensed?

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How do I know if my rehab is licensed?

How do I know if my rehab is licensed? In the United States, the laws that manage alcohol and drug rehab centers differ from one state to another. Each state has its own licensing company and its own requirements for licensing. These companies can inform you the licensing status of a facility, whether there has been grievances in the past, and the arrangement of the facility (residential or out-patient).

They can help you with submitting a complaint with them. You need to make sure when writing your complaint that it is as efficient as possible.

The Department of Healthcare Solutions (DHCS) has sole authority to accredit centers offering 24-hour domestic nonmedical services to qualified adults who are recovering from issues associated with alcohol or other drug (AOD) abuse. Licensure is needed when at least one of the following services is offered: detoxing, group sessions, individual sessions, academic sessions, or alcohol addiction or substance abuse recovery or treatment preparation. In addition, centers might go through other kinds of licenses, clearances, business taxes, or local fees that might be needed by cities or counties where the centers are located. You might want to consult your state’s alcohol and drug program workplace to guarantee compliance with any requirements that they may have.

Many centers accredited by DHCS are licensed. Accreditation by DHCS determines those centers which go beyond minimum levels of service and quality and remains in significant compliance with State program requirements, particularly the Alcohol and/or Other Drug Accreditation Standards.

What is a JCAHO accredited drug rehab?

When it comes to recovery, and anything in life for that matter, doing something right the very first time can conserve a great deal of important resources. In dealing with addiction recovery, this means saving yourself from relapse and further battle with detox and getting clean. Often, finding a JCAHO certified rehab facility can guarantee that you are getting quality care that will lead you to an effective recovery.  We can get more into why JCAHO certified rehab is necessary, what JCAHO recognized rehab is and why drug rehab accreditation matters.

The Joint Commission is a non-profit, private company that recognizes behavioral healthcare companies and drug rehabilitations under the Comprehensive Accreditation Manual for Behavioral Health Care. These centers are examined and evaluated by numerous crucial requirements, consisting of:

– effective combinations of primary, physical, and behavioral healthcare

– essential functions connecting to the care, treatment or services of people

– management of the facility

– emergency management

– infection protection and control

– life safety

– management of medication

– efficient performance

– record of care, treatment and services

– environment of care and much more

A drug rehab which has actually gone through evaluation and given all requirements will end up being JCAHO recognized. They will then have to have routine, un-announced examinations for at least 3 years to keep their requirements and accreditations.

The benefits of a JCAHO certified drug rehab

Since patient care and quality are at the leading edge of the Joint Commission’s requirements, you can decide to join in a JCAHO recognized drug rehab, and will get the very best care possible throughout this hard process. The Joint Commission sets high standards for danger management/reduction and other management problems (such as staff used by the rehab and the rehab’s centers) which when thought about as an whole, implies that you will get treatment from the  best experts with the best centers. As discussed before, a JCAHO accreditation is typically a requirement by multiple insurers for them to cover your treatment expenses. Another beneficial element of the Joint Commission and the work that they do to recognize companies, is their inspection and accreditation records for behavioral healthcare centers such as drug rehabilitations that are open to the general public. With this being said, you can take a look and compare different types of drug rehabilitations prior to deciding which one best matches  your needs and requirements.

Why CARF International?

CARF International accreditation supports an evident sign that promises the general public of a company’s dedication to continuously improve the quality of services and programs with a focus on the satisfaction of the individuals served.

The surveyors use a consultative method throughout the survey process to help you in improving the quality and worth of your company’s offerings. Each study group is chosen based upon a match of the surveyors’ areas of knowledge and the organizations distinct requirements.

Organizations attaining CARF accreditation are acknowledged for their continuous development and continued conformance to the requirements. In addition to showing strong business practices, recognized service providers enjoy:

Fiscal savings: Financial organizations, consisting of ranking firms, financial investment lenders, and insurance coverage providers, search for accreditation as an indication of financial stability. They value the strenuous due diligence that results from accreditation and responds by using cost savings on future financial transactions.

A marketing benefit: Accreditation provides companies a competitive edge in the eyes of potential citizens, families, caretakers, and others. Companies showing the CARF seal stand apart in today’s crowded field of service provider choices.

Risk management: Accreditation can help decrease a company’s direct exposure in areas such as human resources, health care, governance, and financing.

Access to a global network: Accreditation provides a company the chance to team up, form partnerships, and share concepts with a worldwide network of other suppliers that have actually made accreditation.

Why pick CARF over other accreditors? CARF represents constant quality enhancement with a focus on the fulfillment of individuals served. CARF accreditation makes a difference!

Advantages of CARF

CARF Accreditation is granted in a number of ways:

– Three-Year: A “complete accreditation” where the company has actually shown that they satisfy or perhaps goes beyond the requirements of accreditation.

– One-Year: The company still has some work to do to improve services, however they have actually shown the determination and resources to execute these changes, so they are still granted an accreditation conditionally.

– Provisional: After the One-Year accreditation has ended, the company will be evaluated for a possible Three-Year accreditation. If they have not made the essential improvement to advance, they will end up being non-accredited.

– Non-accreditation: The company has significant changes to make and isn’t prepared to uphold accreditation.

There are a couple of other provisionary levels that make some allowances for new companies and organizations that have to be recognized, however there are some restrictions or terms.

The CARF Difference

The CARF site does an outstanding job of showing the advantages of CARF accreditation. They carried out a research study that revealed, longitudinally, the difference that CARF accreditation made to the companies it licensed.

CARF is shown to increase earnings, both through gained clients along with enhancements to budget plan and ROI. Organizations can expect to conserve money by avoiding potential damages for areas lacking in patient safety.

CARF is acknowledged worldwide as the gold standard of accreditation for rehab centers. Understanding exactly what acquiring the accreditation involves, you can be sure that companies get the accreditation and are devoted to quality, patient safety and fulfillment.

What Are the Credentials of the Staff?

When looking for a suitable drug or alcoholic abuse treatment program, it is very important to determine a certified program and to make sure that they are run by specialists who are certified and specifically trained in dealing with addiction.

Does It Offer Detox?

Detoxing is an essential and primary step to effective treatment for drug abuse and addiction. Experts will deal with the instant physiological impacts of stopping drug use and getting rid of toxins from the body.

A lot of inpatient and residential drug abuse programs provide clinically monitored detoxing that securely and methodically withdraws you from the drug or substance.

Nevertheless, it is very important to ask whether a specific program specializes in a detox treatment.

Exactly what’s the Program’s Philosophy?

Think about the approach of the possible recovery program. For example, does the treatment design use a spiritual focus or does it follow a 12-step program? What existing evidence-based treatments are used?

Does It Offer Individualized Treatment Plans?

Many inpatient drug treatment centers provide extreme specialized and individualized treatment plans. These plans consist of medical management offered by a multidisciplinary group of experts. You might wish to inquire about the experts and staff offered at specific treatment programs.

Does It Offer Follow-up Care (Aftercare) and Relapse Prevention Planning?

Follow-up care and relapse prevention are crucial parts of an effective drug abuse treatment program. Follow-up care might consist of transitioning to an outpatient drug or alcohol abuse program, sober living environments, support systems, therapy or other follow-up meetings.

The rate of relapse following treatment for substance abuse can be as high as 50%. For that reason, the most effective programs are those that consist of relapse prevention being a part of their treatment plan.

Neglected Considerations

Recovery Brands carried out a study in 2016 to learn exactly what elements mattered most to individuals leaving treatment. Treatment graduates stated the facility’s financial policies were the most crucial element, followed by program offerings like amenities, recreation, and food quality.

Thinking about all aspects of the treatment experience is an extremely important part of picking a program.

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How do I know if my rehab is licensed?

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How do I know if my rehab is licensed?

How do I know if my rehab is licensed? In the United States, the laws that manage alcohol and drug rehab centers differ from one state to another. Each state has its own licensing company and its own requirements for licensing. These companies can inform you the licensing status of a facility, whether there has been grievances in the past, and the arrangement of the facility (residential or out-patient).

They can help you with submitting a complaint with them. You need to make sure when writing your complaint that it is as efficient as possible.

The Department of Healthcare Solutions (DHCS) has sole authority to accredit centers offering 24-hour domestic nonmedical services to qualified adults who are recovering from issues associated with alcohol or other drug (AOD) abuse. Licensure is needed when at least one of the following services is offered: detoxing, group sessions, individual sessions, academic sessions, or alcohol addiction or substance abuse recovery or treatment preparation. In addition, centers might go through other kinds of licenses, clearances, business taxes, or local fees that might be needed by cities or counties where the centers are located. You might want to consult your state’s alcohol and drug program workplace to guarantee compliance with any requirements that they may have.

Many centers accredited by DHCS are licensed. Accreditation by DHCS determines those centers which go beyond minimum levels of service and quality and remains in significant compliance with State program requirements, particularly the Alcohol and/or Other Drug Accreditation Standards.

What is a JCAHO accredited drug rehab?

When it comes to recovery, and anything in life for that matter, doing something right the very first time can conserve a great deal of important resources. In dealing with addiction recovery, this means saving yourself from relapse and further battle with detox and getting clean. Often, finding a JCAHO certified rehab facility can guarantee that you are getting quality care that will lead you to an effective recovery.  We can get more into why JCAHO certified rehab is necessary, what JCAHO recognized rehab is and why drug rehab accreditation matters.

The Joint Commission is a non-profit, private company that recognizes behavioral healthcare companies and drug rehabilitations under the Comprehensive Accreditation Manual for Behavioral Health Care. These centers are examined and evaluated by numerous crucial requirements, consisting of:

– effective combinations of primary, physical, and behavioral healthcare

– essential functions connecting to the care, treatment or services of people

– management of the facility

– emergency management

– infection protection and control

– life safety

– management of medication

– efficient performance

– record of care, treatment and services

– environment of care and much more

A drug rehab which has actually gone through evaluation and given all requirements will end up being JCAHO recognized. They will then have to have routine, un-announced examinations for at least 3 years to keep their requirements and accreditations.

The benefits of a JCAHO certified drug rehab

Since patient care and quality are at the leading edge of the Joint Commission’s requirements, you can decide to join in a JCAHO recognized drug rehab, and will get the very best care possible throughout this hard process. The Joint Commission sets high standards for danger management/reduction and other management problems (such as staff used by the rehab and the rehab’s centers) which when thought about as an whole, implies that you will get treatment from the  best experts with the best centers. As discussed before, a JCAHO accreditation is typically a requirement by multiple insurers for them to cover your treatment expenses. Another beneficial element of the Joint Commission and the work that they do to recognize companies, is their inspection and accreditation records for behavioral healthcare centers such as drug rehabilitations that are open to the general public. With this being said, you can take a look and compare different types of drug rehabilitations prior to deciding which one best matches  your needs and requirements.

Why CARF International?

CARF International accreditation supports an evident sign that promises the general public of a company’s dedication to continuously improve the quality of services and programs with a focus on the satisfaction of the individuals served.

The surveyors use a consultative method throughout the survey process to help you in improving the quality and worth of your company’s offerings. Each study group is chosen based upon a match of the surveyors’ areas of knowledge and the organizations distinct requirements.

Organizations attaining CARF accreditation are acknowledged for their continuous development and continued conformance to the requirements. In addition to showing strong business practices, recognized service providers enjoy:

Fiscal savings: Financial organizations, consisting of ranking firms, financial investment lenders, and insurance coverage providers, search for accreditation as an indication of financial stability. They value the strenuous due diligence that results from accreditation and responds by using cost savings on future financial transactions.

A marketing benefit: Accreditation provides companies a competitive edge in the eyes of potential citizens, families, caretakers, and others. Companies showing the CARF seal stand apart in today’s crowded field of service provider choices.

Risk management: Accreditation can help decrease a company’s direct exposure in areas such as human resources, health care, governance, and financing.

Access to a global network: Accreditation provides a company the chance to team up, form partnerships, and share concepts with a worldwide network of other suppliers that have actually made accreditation.

Why pick CARF over other accreditors? CARF represents constant quality enhancement with a focus on the fulfillment of individuals served. CARF accreditation makes a difference!

Advantages of CARF

CARF Accreditation is granted in a number of ways:

– Three-Year: A “complete accreditation” where the company has actually shown that they satisfy or perhaps goes beyond the requirements of accreditation.

– One-Year: The company still has some work to do to improve services, however they have actually shown the determination and resources to execute these changes, so they are still granted an accreditation conditionally.

– Provisional: After the One-Year accreditation has ended, the company will be evaluated for a possible Three-Year accreditation. If they have not made the essential improvement to advance, they will end up being non-accredited.

– Non-accreditation: The company has significant changes to make and isn’t prepared to uphold accreditation.

There are a couple of other provisionary levels that make some allowances for new companies and organizations that have to be recognized, however there are some restrictions or terms.

The CARF Difference

The CARF site does an outstanding job of showing the advantages of CARF accreditation. They carried out a research study that revealed, longitudinally, the difference that CARF accreditation made to the companies it licensed.

CARF is shown to increase earnings, both through gained clients along with enhancements to budget plan and ROI. Organizations can expect to conserve money by avoiding potential damages for areas lacking in patient safety.

CARF is acknowledged worldwide as the gold standard of accreditation for rehab centers. Understanding exactly what acquiring the accreditation involves, you can be sure that companies get the accreditation and are devoted to quality, patient safety and fulfillment.

What Are the Credentials of the Staff?

When looking for a suitable drug or alcoholic abuse treatment program, it is very important to determine a certified program and to make sure that they are run by specialists who are certified and specifically trained in dealing with addiction.

Does It Offer Detox?

Detoxing is an essential and primary step to effective treatment for drug abuse and addiction. Experts will deal with the instant physiological impacts of stopping drug use and getting rid of toxins from the body.

A lot of inpatient and residential drug abuse programs provide clinically monitored detoxing that securely and methodically withdraws you from the drug or substance.

Nevertheless, it is very important to ask whether a specific program specializes in a detox treatment.

Exactly what’s the Program’s Philosophy?

Think about the approach of the possible recovery program. For example, does the treatment design use a spiritual focus or does it follow a 12-step program? What existing evidence-based treatments are used?

Does It Offer Individualized Treatment Plans?

Many inpatient drug treatment centers provide extreme specialized and individualized treatment plans. These plans consist of medical management offered by a multidisciplinary group of experts. You might wish to inquire about the experts and staff offered at specific treatment programs.

Does It Offer Follow-up Care (Aftercare) and Relapse Prevention Planning?

Follow-up care and relapse prevention are crucial parts of an effective drug abuse treatment program. Follow-up care might consist of transitioning to an outpatient drug or alcohol abuse program, sober living environments, support systems, therapy or other follow-up meetings.

The rate of relapse following treatment for substance abuse can be as high as 50%. For that reason, the most effective programs are those that consist of relapse prevention being a part of their treatment plan.

Neglected Considerations

Recovery Brands carried out a study in 2016 to learn exactly what elements mattered most to individuals leaving treatment. Treatment graduates stated the facility’s financial policies were the most crucial element, followed by program offerings like amenities, recreation, and food quality.

Thinking about all aspects of the treatment experience is an extremely important part of picking a program.