Abstract
Since almost two decades back a large number of LDCs have embarked on WorId Bank supported structural adjustment programs with the objective to promote economic growth and private investment. We consider how the design of reform programs can increase reform credibility and thus reduce uncertainty in the economy. Using a unique database on adjustment lending, we test the effects of reform on private investment behavior. We find that while political factors seem to have no effect on private investment response in reforming countries, magnitude as well as scope of reform are important positive explanatory variables.