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The paper analyzes the interaction between inflows of foreign aid and the character of the economic policies pursued by the Sri Lankan government between 1977 and 1983. It predominantly enabled the government to push forward with the Mahaweli irrigation scheme on a scale that worked against both liberalization and other components of public investment. The process that led to the adoption and funding of the Mahaweli scheme and continued support for it after its impact on the overall economic program which had become apparent, is examined in detail. (DÜI-Sbt)

SummaryThis article builds on recent literature on political settlements and new institutional economics to suggest a "good‐fit" alternative to the "best practices" approaches that until recently have dominated efforts at governance reform. It introduces a typology for distinguishing systematically among different groups of countries and maps the typology to four alternative approaches to governance reform. The article then offers a set of "good‐fit" hypotheses as to the conditions under which each of the approaches is likely to be effective. Copyright © 2015 John Wiley & Sons, Ltd.