The institutional failures of International Monetary Fund conditionality
AbstractThe conditionality employed by the International Monetary Fund (IMF) in its lending policy is one of the main themes of controversy in the debate on the new international financial architecture. The purpose of this paper is to propose an analytical framework integrating the diverse explanations of the failure of IMF conditionality. Our analysis is based on the idea that the IMF is a key player in the running of markets in a global economy. More precisely, we explain that most of the criticisms concerning conditionality should be analyzed through what we agree to call the institutional failures of IMF conditionality. These institutional failures must be appreciated at two complementary levels: the first level refers to the intrinsic bureaucratic bias of the IMF while the second deals with the inability of the IMF to manage the institutional change required for the development of market processes and hence to maintain the institutional order in recipient countries. Although the first level failures have been particularly well studied via the international public choice approach, those of the second are, at best, often reduced to a simple statement. However, analyzing both levels of institutional failure of the IMF together is not without implications for the way in which the reforms of conditionality are conceived. Indeed, by including an analysis of the second level of failures, i.e. those relating to the relationship between conditionality and domestic institutional change, the recommendation of ex-ante conditionality emanating from the public choice approach, which tackles the first level of failures, will be invalidated. Instead a new approach will be proposed that suggests the separation of the role of the IMF as financial backer from its role as adviser to countries confronted by the globalization process.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by HAL in its series Post-Print with number halshs-00238490.
Date of creation: 2007
Date of revision:
Publication status: Published, The Review of International Organizations, 2007, 2, 4, pp. 309-327
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00238490/en/
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/
International Monetary Fund (IMF);
Other versions of this item:
- Jean-Pierre Allegret & Philippe Dulbecco, 2007. "The institutional failures of International Monetary Fund conditionality," The Review of International Organizations, Springer, Springer, vol. 2(4), pages 309-327, December.
- F3 - International Economics - - International Finance
- N2 - Economic History - - Financial Markets and Institutions
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Axel Dreher & Roland Vaubel, 2002.
"Does the IMF cause moral hazard and political business cycles? Evidence from panel data,"
International Finance, EconWPA
- Dreher, Axel & Vaubel, Roland, 2000. "Does the IMF cause moral hazard and political business cycles? : Evidence from panel data," Discussion Papers 598, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
- Svensson, Jakob, 2003. "Why conditional aid does not work and what can be done about it?," Journal of Development Economics, Elsevier, vol. 70(2), pages 381-402, April.
- Rodrik, Dani, 2005.
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 14, pages 967-1014
- Dani Rodrick, 2003. "Growth Strategies," Economics working papers 2003-17, Department of Economics, Johannes Kepler University Linz, Austria.
- Rodrik, Dani, 2003. "Growth Strategies," CEPR Discussion Papers 4100, C.E.P.R. Discussion Papers.
- Dani Rodrik, 2003. "Growth Strategies," NBER Working Papers 10050, National Bureau of Economic Research, Inc.
- Axel Dreher, 2008.
"IMF Conditionality: Theory and Evidence,"
KOF Working papers
08-188, KOF Swiss Economic Institute, ETH Zurich.
- Philippe DULBECCO & Jean-Pierre ALLEGRET & COURBIS, 1999. "Financial Liberalisation and Stability of the Financial System in Emerging Markets: the institutional dimension of financial crises," Working Papers 199918, CERDI.
- Axel Dreher & Nathan Jensen, 2005.
"Independent Actor or Agent? An Empirical Analysis of the impact of US interests on IMF Conditions,"
KOF Working papers
05-118, KOF Swiss Economic Institute, ETH Zurich.
- Axel Dreher & Nathan Jensen, 2003. "Independent Actor or Agent? An Empirical Analysis of the impact of US interests on IMF Conditions," International Finance, EconWPA 0310004, EconWPA, revised 08 Jan 2004.
- Domenico Lombardi, 2005. "The IMF'S Role in Low-Income Countries," IMF Working Papers 05/177, International Monetary Fund.
- Axel Dreher, 2004. "A Public Choice Perspective of IMF and World Bank Lending and Conditionality," Public Choice, Springer, Springer, vol. 119(3_4), pages 445-464, 06.
- Axel Dreher, 2003. "The influence of elections on IMF programme interruptions," Journal of Development Studies, Taylor & Francis Journals, vol. 39(6), pages 101-120.
- Daniel Berkowitz & Karina Pistor & Jean-Francois Richard, 2001.
"Economic Development, Legality, and the Transplant Effect,"
William Davidson Institute Working Papers Series
410, William Davidson Institute at the University of Michigan.
- Berkowitz, Daniel & Pistor, Katharina & Richard, Jean-Francois, 2003. "Economic development, legality, and the transplant effect," European Economic Review, Elsevier, vol. 47(1), pages 165-195, February.
- Daniel Berkowitz & Katharina Pistor & Jean-Francois Richard, 2000. "Economic Development, Legality, and the Transplant Effect," William Davidson Institute Working Papers Series 308, William Davidson Institute at the University of Michigan.
- Daniel Berkowitz & Katharina Pistor & Jean-Francois Richard, 2000. "Economic Development, Legality, and the Transplant Effect," CID Working Papers, Center for International Development at Harvard University 39, Center for International Development at Harvard University.
- Timothy D. Lane & Marianne Schulze-Gattas & T. M. Tsikata & Steven Phillips & Atish R. Ghosh & A. Javier Hamann, 1999. "IMF-Supported Programs in Indonesia, Korea and Thailand," IMF Occasional Papers 178, International Monetary Fund.
- Leslie Teo & Charles Enoch & Carl-Johan Lindgren & TomÃƒÂ¡s J. T. BaliÃƒÂ±o & Anne Marie Gulde & Marc Quintyn, 2000. "Financial Sector Crisis and Restructuring," IMF Occasional Papers 188, International Monetary Fund.
- Devesh KAPUR & Richard WEBB, 2000. "Governance-Related Conditionalities Of The International Financial Institutions," G-24 Discussion Papers 6, United Nations Conference on Trade and Development.
- Robert J. Barro & Jong-Wha Lee, 2002.
"IMF Programs: Who is Chosen and What Are the Effects?,"
NBER Working Papers
8951, National Bureau of Economic Research, Inc.
- Barro, Robert J. & Lee, Jong-Wha, 2005. "IMF programs: Who is chosen and what are the effects?," Journal of Monetary Economics, Elsevier, Elsevier, vol. 52(7), pages 1245-1269, October.
- Robert J Barro & Jong-Wha Lee, 2003. "IMF Programs: Who Is Chosen and What Are the Effects?," Departmental Working Papers, The Australian National University, Arndt-Corden Department of Economics 2003-09, The Australian National University, Arndt-Corden Department of Economics.
- North, D.C., 1990.
"A Transaction Cost Theory of Politics,"
Papers, Washington St. Louis - School of Business and Political Economy
144, Washington St. Louis - School of Business and Political Economy.
- World Bank, 2005. "Economic Growth in the 1990s : Learning from a Decade of Reform," World Bank Publications, The World Bank, number 7370, October.
- David Bevan, 2005. "The IMF and Low-Income Countries," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 6(2), pages 67-85, April.
- Joseph P. Joyce, 2006. "Promises Made, Promises Broken: A Model Of Imf Program Implementation," Economics and Politics, Wiley Blackwell, Wiley Blackwell, vol. 18(3), pages 339-365, November.
- Gould, Erica R., 2003. "Money Talks: Supplementary Financiers and International Monetary Fund Conditionality," International Organization, Cambridge University Press, Cambridge University Press, vol. 57(03), pages 551-586, June.
- Mohsin S. Khan & Sunil Sharma, 2001. "IMF Conditionality and Country Ownership of Programs," IMF Working Papers 01/142, International Monetary Fund.
- Axel Dreher & Roland Vaubel, 2004.
"The Causes and Consequences of IMF Conditionality,"
Emerging Markets Finance and Trade, M.E. Sharpe, Inc.,
M.E. Sharpe, Inc., vol. 40(3), pages 26-54, May.
- Collier, Paul & Guillaumont, Patrick & Guillaumont, Sylviane & Gunning, Jan Willem, 1997. "Redesigning conditionality," World Development, Elsevier, vol. 25(9), pages 1399-1407, September.
- Alex Mourmouras & Anna Ivanova & George C. Anayotos & Wolfgang Mayer, 2003. "What Determines the Implementation of IMF-Supported Programs?," IMF Working Papers 03/8, International Monetary Fund.
- Dreher, Axel & Sturm, Jan-Egbert & Vreeland, James Raymond, 2009. "Global horse trading: IMF loans for votes in the United Nations Security Council," European Economic Review, Elsevier, vol. 53(7), pages 742-757, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).
If references are entirely missing, you can add them using this form.