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Economic Liberalization via IMF Structural Adjustment: Sowing the Seeds of Civil War?

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  • Hartzell, Caroline A.
  • Hoddie, Matthew
  • Bauer, Molly

Abstract

Previous studies that have explored the effects of economic liberalization on civil war have employed aggregate measures of openness and have failed to account for potential endogeneity bias. In this research note, we suggest two improvements to the study of the relationship between liberalization and civil war. First, emphasizing that it is processes that systematically create new economic winners and losers rather than particular levels of economic openness that have the potential to generate conflict, we consider the effects of one oft-used means of liberalizing economies: the adoption by countries of International Monetary Fund (IMF) structural adjustment programs. Second, we use a bivariate probit model to address issues of endogeneity bias. Analyzing all data available for the period between 1970 and 1999, we identify an association between the adoption of IMF programs and the onset of civil war. This finding suggests that IMF programs to promote economic openness unintentionally may be creating an environment conducive to domestic conflict.

Suggested Citation

  • Hartzell, Caroline A. & Hoddie, Matthew & Bauer, Molly, 2010. "Economic Liberalization via IMF Structural Adjustment: Sowing the Seeds of Civil War?," International Organization, Cambridge University Press, vol. 64(2), pages 339-356, April.
  • Handle: RePEc:cup:intorg:v:64:y:2010:i:02:p:339-356_00
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    1. repec:gig:joupla:v:4:y:2012:i:3:p:3-37 is not listed on IDEAS
    2. Thomas Stubbs & Bernhard Reinsberg & Alexander Kentikelenis & Lawrence King, 2020. "How to evaluate the effects of IMF conditionality," The Review of International Organizations, Springer, vol. 15(1), pages 29-73, January.
    3. Ali Burak G├╝ven, 2012. "The IMF, the World Bank, and the Global Economic Crisis: Exploring Paradigm Continuity," Development and Change, International Institute of Social Studies, vol. 43(4), pages 869-898, July.
    4. Stephen C. Nelson & Geoffrey P. R. Wallace, 2017. "Are IMF lending programs good or bad for democracy?," The Review of International Organizations, Springer, vol. 12(4), pages 523-558, December.
    5. Toke S. Aidt & Facundo Albornoz & Esther Hauk, 2019. "Foreign Influence and Domestic Policy: A Survey," Working Papers 1072, Barcelona Graduate School of Economics.
    6. Caleb Stroup & Benjamin Zissimos, 2013. "Social Unrest in the Wake of IMF Structural Adjustment Programs," CESifo Working Paper Series 4211, CESifo.
    7. Kai Gehring & Valentin F. Lang, 2018. "Stigma or Cushion? IMF Programs and Sovereign Creditworthiness," CESifo Working Paper Series 7339, CESifo.
    8. Psofogiorgos, Nikolaos - Alexandros & Metaxas, Theodore, 2017. "IMF, Democracy and Economic Development: Review and Critique," MPRA Paper 79403, University Library of Munich, Germany.
    9. Trude Midtgaard & Krishna Vadlamannati & Indra Soysa, 2014. "Does the IMF cause civil war? A comment," The Review of International Organizations, Springer, vol. 9(1), pages 107-124, March.
    10. Michael Breen & Robert Gillanders, 2015. "Political Trust, Corruption, and Ratings of the IMF and the World Bank," International Interactions, Taylor & Francis Journals, vol. 41(2), pages 337-364, March.
    11. Lang, Valentin, 2016. "The Economics of the Democratic Deficit: The Effect of IMF Programs on Inequality," Working Papers 0617, University of Heidelberg, Department of Economics.

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