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Voting Power in the Governance of the International Monetary Fund

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  • Dennis Leech

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Abstract

In general in an organisation whose system of governance involves weighted voting, a member's weight in terms of the number of votes and the formal power it represents differ. Power indices provide a means of analysing this difference. The paper uses new algorithms for computing power indices for large games. Three analyses are carried out: (1) the distribution of Banzhaf voting power among members in 1999; the results show that the United States has considerably more power over ordinary decisions than its weight of 17% but that the use of special supermajorities limits its power; (2) the effect of varying the majority requirement on the power of the IMF to act and the powers of members to prevent and initiate action (Coleman indices); the results show the effect of supermajorities severely limits the power to act and therefore renders the voting system ineffective in democratic terms, also the sovereignty of the United States within the IMF is effectively limited to just the power of veto; (3) the paper proposes the determination of the weights instrumentally by means of an iterative algorithm to give the required power distribution; this would be a useful procedure for determining appropriate changes in weights consequent on changes to individual countries' quotas; this is applied to the 1999 data. Policy recommendations are, first, that the IMF use only simple majority voting, and discontinue using special supermajorities, and, second, allocate voting weight instrumentally using power indices. Copyright Kluwer Academic Publishers 2002

Suggested Citation

  • Dennis Leech, 2002. "Voting Power in the Governance of the International Monetary Fund," Annals of Operations Research, Springer, vol. 109(1), pages 375-397, January.
  • Handle: RePEc:spr:annopr:v:109:y:2002:i:1:p:375-397:10.1023/a:1016324824094
    DOI: 10.1023/A:1016324824094
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    Citations

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    Cited by:

    1. Thimann, Christian & Reynaud, Julien & Gatarek, Lukasz, 2007. "Proximity and linkages among coalition participants: a new voting power measure applied to the International Monetary Fund," Working Paper Series 819, European Central Bank.
    2. Le Breton, Michel & Lepelley, Dominique & Macé, Antonin & Merlin, Vincent, 2017. "Le mécanisme optimal de vote au sein du conseil des représentants d’un système fédéral," L'Actualité Economique, Société Canadienne de Science Economique, vol. 93(1-2), pages 203-248, Mars-Juin.
    3. Kamei, Kenju, 2014. "Promoting Competition or Helping Less-Endowed? An Experiment on Collective Institutional Choices under Intra-Group Inequality," MPRA Paper 56774, University Library of Munich, Germany.
    4. 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.
    5. repec:spr:homoec:v:34:y:2017:i:1:d:10.1007_s41412-017-0036-5 is not listed on IDEAS
    6. Matthew Gould & Matthew D. Rablen, 2017. "Reform of the United Nations Security Council: equity and efficiency," Public Choice, Springer, vol. 173(1), pages 145-168, October.
    7. Bhattacherjee, Sanjay & Sarkar, Palash, 2018. "Voting in the Goods and Service Tax Council of India," MPRA Paper 86239, University Library of Munich, Germany.
    8. Leech, Dennis, 2002. "The Use of Coleman's Power Indices to Inform the Choice of Voting Rule with Reference to the IMF Governing Body and the EU Council of Ministers," Economic Research Papers 269458, University of Warwick - Department of Economics.
    9. Matthew Gould & Matthew D. Rablen, 2016. "Equitable representation in councils: theory and an application to the United Nations Security Council," Public Choice, Springer, vol. 169(1), pages 19-51, October.
    10. Géraldine Mahieu & Dirk Ooms & Stéphane Rottier, 2003. "The Governance of the International Monetary Fund with a Single EU Chair," Financial Stability Review, National Bank of Belgium, vol. 1(1), pages 173-188, June.
    11. Reynaud, Julien & Vauday, Julien, 2008. "IMF lending and geopolitics," Working Paper Series 965, European Central Bank.
    12. Bhattacherjee, Sanjay & Sarkar, Palash, 2017. "Correlation and inequality in weighted majority voting games," MPRA Paper 83168, University Library of Munich, Germany.
    13. Leech, Dennis, 2010. "Power Indices in Large Voting Bodies," Economic Research Papers 270996, University of Warwick - Department of Economics.
    14. Leech, Dennis, 2003. "The Utility of the Voting Power Approach," Economic Research Papers 269562, University of Warwick - Department of Economics.
    15. Leech, Dennis & Leech, Robert, 2009. "Reforming IMF and World Bank governance : in search of simplicity, transparency and democratic legitimacy in the voting rules," Economic Research Papers 271286, University of Warwick - Department of Economics.
    16. Leech, Dennis, 2003. "The Utility of the Voting Power Approach," The Warwick Economics Research Paper Series (TWERPS) 678, University of Warwick, Department of Economics.
    17. Alonso-Meijide, J.M. & Bilbao, J.M. & Casas-Méndez, B. & Fernández, J.R., 2009. "Weighted multiple majority games with unions: Generating functions and applications to the European Union," European Journal of Operational Research, Elsevier, vol. 198(2), pages 530-544, October.
    18. repec:spr:annopr:v:244:y:2016:i:2:d:10.1007_s10479-016-2124-5 is not listed on IDEAS
    19. Jonathan R. Strand & Kenneth J. Retzl, 2016. "Did Recent Voice Reforms Improve Good Governance within the World Bank?," Development and Change, International Institute of Social Studies, vol. 47(3), pages 415-445, May.

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    Keywords

    power indices; Banzhaf index; Coleman index; IMF; Keynes;

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