A former banker and staff member of the International Monetary Fund, Louis W. Pauly explains why people are deeply concerned about the emergence of a global economy and the increasingly integrated ...capital markets at its heart. In nations as diverse as France, Canada, Russia, and Mexico, the lives of citizens are disrupted when national policy falls out of line with the expectations of international financiers. Such dilemmas, ever more conspicuous around the world, arise from the disjuncture between a rapidly changing international economic system and a political order still constituted by sovereign states. The evolution of global capital markets inspires an understandable fear among people that the governing authorities accountable to them are losing the power to make substantive decisions affecting their own material prospects and those of their children. Pauly points out that today's capital markets resulted from decisions taken over many years by sovereign states, and particularly by the leading industrial democracies, who simultaneously crafted the instrument of multilateral economic surveillance. The effort to build adequate political foundations for global capital markets spans the twentieth century and links the histories of such institutions as the League of Nations, the International Monetary Fund, the European Union, and the Group of Seven.
The article highlights the shift in lending policy towards instruments without ex post conditionality by the International Monetary Fund (IMF) amid the COVID-19 pandemic in 2020. The objectives of ...the article are two-fold: Firstly, it aims to clearly indicate the shift of IMF lending policy towards instruments without conditionality in 2020; secondly, it complements the existing academic literature on changes in conditionality by testing three factors that contribute to the shift. It is concluded that similarly to the global financial crisis in 2008, more discretion was given to IMF staff to rapidly respond to the crisis and that the IMF staff increased the Fund's power position in the global financial safety net through expanded lending. A novelty around the COVID-19 crisis is the change in the normative debate around conditionality, which intensified in the years before the pandemic, suggesting that a more permanent change in IMF conditionality policy is taking shape.
This article highlights an important yet insufficiently understood international-level determinant of inequality in the developing world: structural adjustment programs by the International Monetary ...Fund (IMF). Studying a panel of 135 countries for the period 1980 to 2014, we examine income inequality using multivariate regression analysis corrected for non-random selection into both IMF programs and associated policy reforms (known as ‘conditionality’). We find that, overall, policy reforms mandated by the IMF increase income inequality in borrowing countries. We also test specific pathways linking IMF programs to inequality by disaggregating conditionality by issue area. Our analyses indicate adverse distributional consequences for four policy areas: fiscal policy reforms that restrain government expenditure, external sector reforms stipulating trade and capital account liberalization, financial sector reforms entailing inflation-control measures, and reforms that restrict external debt. These effects occur one year after the incidence of an IMF program, and persist in the medium term. Taken together, our findings suggest that the IMF's recent attention to inequality neglects the multiple ways through which the organization's own policy advice has contributed to inequality in the developing world.
Does the International Monetary Fund (IMF) increase inequality? To answer this question, this article introduces a new empirical strategy for determining the effects of IMF programs that exploits the ...heterogeneous effect of IMF liquidity on loan allocation based on a difference-in-differences logic. The results show that IMF programs increase income inequality. An analysis of decile-specific income data shows that this effect is driven by absolute income losses for the poor and not by income gains for the rich. The effect persists for up to 5 years, and is stronger for IMF programs in democracies, and when policy conditions, particularly those that demand social-spending cuts and labor-market reforms, are more extensive. These results suggest that IMF programs can constrain government responsiveness to domestic distributional preferences.
The IMF's response to the global crisis of 2008–9 marked a significant change from its past policies. The Fund provided relatively large amounts of credit quickly with limited conditions and accepted ...the use of capital controls. This book traces the evolution of the IMF's actions to promote international financial stability from the Bretton Woods era through the most recent crisis. The analysis includes an examination of the IMF's crisis management activities during the debt crisis of the 1980s, the upheavals in emerging markets in the 1990s and early 2000s, and the ongoing European crisis. The dominant influence of the United States and other advanced economies in the governance of the IMF is also described, and the replacement of the G7 nations by the more inclusive G20, which have promised to give the IMF a role in their mutual assessment of policies while undertaking reforms of the IMF's governance.
Among the many drivers of health inequities, this article focuses on important, yet insufficiently understood, international-level determinants: economic globalization and the organizations that ...spread market-oriented policies to the developing world. One such organization is the International Monetary Fund (IMF), which provides financial assistance to countries in economic trouble in exchange for policy reforms. Through its ‘structural adjustment programs,’ countries around the world have liberalized and deregulated their economies. We examine how policy reforms prescribed in structural adjustment programs explain variation in health equity between nations—approximated by health system access and neonatal mortality. Our empirical analysis uses an original dataset of IMF-mandated policy reforms for a panel of up to 137 developing countries between 1980 and 2014. We employ regression analysis to evaluate the relationship between these reforms and health equity, taking into account the non-random selection and design of IMF programs. We find that structural adjustment reforms lower health system access and increase neonatal mortality. Additional analyses show that labor market reforms drive these deleterious effects. Overall, our evidence suggests that structural adjustment programs endanger the attainment of Sustainable Development Goals in developing countries.
•Lending programs by the IMF impact on health equity.•IMF programs reduce health system access in developing countries.•IMF programs increase neonatal mortality in developing countries.•Labor market reforms are key drivers behind these adverse consequences.
Why do governments turn to the International Monetary Fund (IMF) and with what effects? This book argues that governments enter IMF programs for economic and political reasons, and finds that the ...effects are negative on economic growth and income distribution. By bringing in the IMF, governments gain political leverage - via conditionality - to push through unpopular policies. Note that if governments desiring conditions are more likely to participate, estimating program effects is not straightforward: one must control for the potentially unobserved political determinants of selection. This book addresses the selection problem using a dynamic bivariate version of the Heckman model analyzing cross-national time-series data. The main finding is that the negative effects of IMF programs on economic growth are mitigated for certain constituencies since programs also have distributional consequences. But IMF programs doubly hurt the least well off in society: they lower growth and shift the income distribution upward.
This study examines individual expressions of confidence in the World Bank and the International Monetary Fund using the World Values Survey-Wave 7 data to determine whether alignment of individual ...beliefs with institutional policies supports confidence and whether national borrowing from these institutions with attendant conditionalities erodes confidence. The main hypothesis tested is that confidence in each organization is positively associated with alignment of survey respondents’ economic beliefs and the policies of the organizations. Results indicate that closer alignment of beliefs with organization policies is positively associated with greater confidence but greater national borrowing from either organization erodes confidence. Conditionalities for assistance are resented by citizens in recipient countries.
•Analysis of confidence in World Bank and International Monetary Fund.•World Values Survey-Wave 7 data analysis using discrete choice models.•Alignment of individual beliefs is positively associated with organization policies.•National borrowing from either organization erodes individual confidence.•Heterogeneous effects by income and other economic factors are explored.
Sociologists have long examined how states, intergovernmental organizations (IGOs), international nongovernmental organizations (INGOs), and professional groups interact in order to institutionalize ...their preferred norms at the transnational level. Yet, explanations of global norm-making that emphasize inter-organizational negotiations do not adequately explain the intra-organizational script-writing—that is, the codification of norms in prescriptive behavioral templates—that underpins this process. This article opens the black box of how scripts emerge and institutionalize within IGOs. Script-writing is a function of both world-cultural frames and material interests, held by different intra-organizational actors: scientific IGO staff and state representatives in governing bodies, respectively. The interplay between these frames and interests determines whether scripts will institutionalize. In this theoretical model, world-cultural and power-political explanations are pertinent to different, mutually informing, and coexisting aspects of the script-writing process. As a corollary of our approach, we present a conceptual framework for the study of intra-IGO script-writing, which is contingent on three normative struggles: among IGO staff, within an IGO's board of directors, and between the staff and the board. To empirically substantiate our arguments, we examine scripts on taxation and capital controls by the International Monetary Fund. We conclude by discussing the broader implications of our model for the study of international organizations and the engines of global norm-making.
Abstract
The global populist backlash is considered threatening to the multilateral order, but its impact on individual attitudes toward international organizations, like the International Monetary ...Fund (IMF), is understudied. We bridge insights from research on the IMF and populism to develop a theoretical framework centered on three propositions. We argue that populist individuals should be more prone to blame the IMF for economic problems than non-populists, but that this effect is highly conditional on sovereignty intrusion, escalating when an IMF program exists and as the program becomes more onerous. In contrast, IMF scapegoating by populist politicians should be largely ineffective. Analyzing survey data from across the European Union and an original survey experiment in Greece, we find support for each contention. The paper advances understanding of the partisan politics of the IMF and shows that the implications of the populist wave for international order are more complex than often assumed.
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