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Do external interventions work? The case of trade reform conditions in IMF supported programs

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  • Wei, Shang-Jin
  • Zhang, Zhiwei

Abstract

Trade reform conditions are common in IMF supported programs. Of the 99 countries that had IMF programs during 1993-2003, 77 had trade reform conditions in their programs. Since the WTO has not been found especially effective in promoting trade openness for most developing countries, it is of great interest to see if the IMF has been more effective as it combines carrots and sticks not available to the WTO. Yet, the effectiveness of these trade conditions has not been systematically studied. Using a unique dataset, this paper provides such an assessment. It finds that trade conditions are indeed associated with an increase in trade openness on average, but the effect comes mostly from countries that can be characterized by a high degree of "willingness to reform."

Suggested Citation

  • Wei, Shang-Jin & Zhang, Zhiwei, 2010. "Do external interventions work? The case of trade reform conditions in IMF supported programs," Journal of Development Economics, Elsevier, vol. 92(1), pages 71-81, May.
  • Handle: RePEc:eee:deveco:v:92:y:2010:i:1:p:71-81
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Ernesto Crivelli & Sanjeev Gupta, 2016. "Does conditionality in IMF-supported programs promote revenue reform?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(3), pages 550-579, June.
    2. Bown, Chad P. & Hoekman, Bernard, 2007. "Developing Countries and Enforcement of Trade Agreements: Why Dispute Settlement Is Not Enough," CEPR Discussion Papers 6459, C.E.P.R. Discussion Papers.
    3. Alice Nicole Sindzingre, 2015. "‘Policy Externalisation’ Inherent Failure: International Financial Institutions’ Conditionality in Developing Countries," Post-Print hal-01668363, HAL.
    4. Stubbs, Thomas & Kentikelenis, Alexander & Stuckler, David & McKee, Martin & King, Lawrence, 2017. "The impact of IMF conditionality on government health expenditure: A cross-national analysis of 16 West African nations," Social Science & Medicine, Elsevier, vol. 174(C), pages 220-227.
    5. Bown, Chad P. & Tovar, Patricia, 2011. "Trade liberalization, antidumping, and safeguards: Evidence from India's tariff reform," Journal of Development Economics, Elsevier, vol. 96(1), pages 115-125, September.
    6. Pierre-Louis Vézina, 2014. "Race-to-the-bottom Tariff Cutting," Review of International Economics, Wiley Blackwell, vol. 22(3), pages 444-458, August.
    7. Wei, Shang-Jin & Zhang, Zhiwei, 2010. "Do external interventions work? The case of trade reform conditions in IMF supported programs," Journal of Development Economics, Elsevier, vol. 92(1), pages 71-81, May.
    8. Jinjarak, Yothin & Salinas, Gonzalo & Tsikata, Yvonne M., 2013. "The effect of World Bank trade adjustment assistance on trade and growth, 1987–2004: Is the glass half full or half empty?," Economic Systems, Elsevier, vol. 37(3), pages 415-430.
    9. Bernard M. Hoekman, 2013. "Multilateral Institutions and African Economic Integration," RSCAS Working Papers 2013/67, European University Institute.

    More about this item

    Keywords

    Conditionality Ownership Openness;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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