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Voting Power in the Bretton Woods Institutions

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  • Leech, Dennis

    (Warwick University)

  • Leech, Robert

    (Birkbeck, London University)

Abstract

The constitutions of the Bretton Woods Institutions require decisions to be taken by weighted voting: each member country possesses a number of votes, depending on its quota allocation, all of which must always be cast as a bloc. This leads to a problem of democratic legitimacy since a member’s influence or voting power within such decision-making systems does not necessarily correspond to its voting weight. In previous work it has been shown that the present system of weighted voting in the IMF gives disproportionate influence to the USA at the expense of all other members. This effect occurs in both the board of governors and the executive board. This paper looks at the power implications of the structure of the IMF and World Bank executive boards (in which members are grouped into constituencies that cast their combined weighted votes as a bloc) from the point of view of formal voting power (using the Penrose power index). A criticism that is frequently made is that the present constituency structure and voting weights work to enhance the power of the developed and creditor countries at the expense of the poor, and that many countries are effectively impotent; we show that the weighted voting system adds to this anti-democratic bias and produces some unintended effects (for example the disfranchisement of Estonia in the Nordic/Baltic constituency and of five Central American republics in the Spanish/ Mexican/Venezuelan constituency, even though in neither case is there a dictator ). We argue generally that the voting power approach is more than just the calculation of power indices and can in fact produce solid facts by identifying cases where members of weighted voting bodies are actually disfranchised.

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Bibliographic Info

Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 718.

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Length: 34 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:wrk:warwec:718

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Cited by:
  1. Leech, Dennis & Leech, Robert, 2009. "Reforming IMF and World Bank governance : in search of simplicity, transparency and democratic legitimacy in the voting rules," The Warwick Economics Research Paper Series (TWERPS) 914, University of Warwick, Department of Economics.
  2. Leech, Dennis & Leech, Robert, 2004. "Voting Power and Voting Blocs," The Warwick Economics Research Paper Series (TWERPS) 716, University of Warwick, Department of Economics.
  3. Julien Reynaud & Fabien Lange & Lukasz Gatarek & Christian Thimann, 2007. "Proximity in coalition building," Working Paper Series 0808, Óbuda University, Keleti Faculty of Business and Management, revised Jul 2008.
  4. J Harrigan & C Wang & H El-Said, 2004. "The Economic and Politics Determinants of IMF and World Bank Lending in the Middle East and North Africa," The School of Economics Discussion Paper Series 0411, Economics, The University of Manchester.
  5. J. Alonso-Meijide & C. Bowles & M. Holler & S. Napel, 2009. "Monotonicity of power in games with a priori unions," Theory and Decision, Springer, vol. 66(1), pages 17-37, January.

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