IDEAS home Printed from https://ideas.repec.org/a/taf/cnpexx/v19y2014i3p445-469.html
   My bibliography  Save this article

Controlling Capital: The International Monetary Fund and Transformative Incremental Change from Within International Organisations

Author

Listed:
  • Jeffrey M. Chwieroth

Abstract

As a result of a long-running internal debate there have been notable incremental changes to how the International Monetary Fund (IMF) treats capital controls, particularly those directed at inflows. These changes combine new acceptance of these policy instruments with an older emphasis on their negative consequences and on the desirability of free movement of capital. Policy change of this sort is puzzling from the standpoint of the existing literature on international organisations (IOs), which has thus far paid little attention to transformative incremental change associated with long-term contestation. This article departs from this tendency by drawing on insights from principal-agent theory, constructivism and historical institutionalism to identify the conditions under which such change may originate. I argue that actors within IOs are likely to pursue incremental change by layering new policies on to old ones as a way to build coalitions and to respond to external organisational insecurity imperatives and diverse member state preferences and to internal path-dependent organisational cultural features. Over time the incremental shifts brought by layering can induce transformative rather than reproductive change because they fit with consequentialist and appropriateness behavioural logics. I illustrate this argument by investigating recent changes in IMF policy on capital controls.

Suggested Citation

  • Jeffrey M. Chwieroth, 2014. "Controlling Capital: The International Monetary Fund and Transformative Incremental Change from Within International Organisations," New Political Economy, Taylor & Francis Journals, vol. 19(3), pages 445-469, May.
    • Handle: RePEc:taf:cnpexx:v:19:y:2014:i:3:p:445-469
    DOI: 10.1080/13563467.2013.796451
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13563467.2013.796451
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13563467.2013.796451?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Nicolas E. Magud & Carmen M. Reinhart & Kenneth S. Rogoff, 2018. "Capital Controls: Myth and Reality--A Portfolio Balance Approach," Annals of Economics and Finance, Society for AEF, vol. 19(1), pages 1-47, May.
    2. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1993. "Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 108-151, March.
    3. Mr. Martin D Kaufman & Mr. Steven T Phillips & Mr. Rodrigo O. Valdes & Nicolas Eyzaguirre, 2011. "Managing Abundance to Avoid a Bust in Latin America," IMF Staff Discussion Notes 2011/007, International Monetary Fund.
    4. Mr. Jonathan David Ostry & Mr. Atish R. Ghosh & Mr. Anton Korinek, 2012. "Multilateral Aspects of Managing the Capital Account," IMF Staff Discussion Notes 2012/010, International Monetary Fund.
    5. Jonathan D. Ostry, 2012. "Managing Capital Flows: What Tools to Use?," Asian Development Review (ADR), World Scientific Publishing Co. Pte. Ltd., vol. 29(01), pages 82-88, June.
    6. Nielson, Daniel L. & Tierney, Michael J., 2003. "Delegation to International Organizations: Agency Theory and World Bank Environmental Reform," International Organization, Cambridge University Press, vol. 57(2), pages 241-276, April.
    7. Jeffrey M. Chwieroth, 2010. "Capital Ideas: The IMF and the Rise of Financial Liberalization," Economics Books, Princeton University Press, edition 1, number 9087.
    8. Copelovitch,Mark S., 2010. "The International Monetary Fund in the Global Economy," Cambridge Books, Cambridge University Press, number 9780521143585, September.
    9. Copelovitch,Mark S., 2010. "The International Monetary Fund in the Global Economy," Cambridge Books, Cambridge University Press, number 9780521194334, September.
    10. International Monetary Fund, 2002. "Capital Account Liberalization and Financial Sector Stability," IMF Occasional Papers 2002/005, International Monetary Fund.
    11. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1993. "Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 108-151, March.
    12. Axel Dreher & Roland Vaubel, 2004. "The Causes and Consequences of IMF Conditionality," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 40(3), pages 26-54, May.
    13. Fioretos, Orfeo, 2011. "Historical Institutionalism in International Relations," International Organization, Cambridge University Press, vol. 65(2), pages 367-399, April.
    14. Nicolas Magud & Carmen Reinhart & Kenneth Rogoff, 2005. "Capital Controls: Myth and Reality A Portfolio Balance Approach to Capital Controls," University of Oregon Economics Department Working Papers 2006-10, University of Oregon Economics Department.
    15. Mr. Akira Ariyoshi & Mr. Andrei A Kirilenko & Ms. Inci Ötker & Mr. Bernard J Laurens & Mr. Jorge I Canales Kriljenko & Mr. Karl F Habermeier, 2000. "Capital Controls: Country Experiences with Their Use and Liberalization," IMF Occasional Papers 2000/009, International Monetary Fund.
    16. Martin B. Carstensen, 2011. "Ideas are Not as Stable as Political Scientists Want Them to Be: A Theory of Incremental Ideational Change," Political Studies, Political Studies Association, vol. 59(3), pages 596-615, October.
    17. Mr. Anton Korinek, 2011. "The New Economics of Capital Controls Imposed for Prudential Reasons+L4888," IMF Working Papers 2011/298, International Monetary Fund.
    18. Ben Clift & Jim Tomlinson, 2012. "When rules started to rule: the IMF, neo-liberal economic ideas and economic policy change in Britain," Review of International Political Economy, Taylor & Francis Journals, vol. 19(3), pages 477-500, August.
    19. Jonathan David Ostry & Atish R. Ghosh & Anton Korinek, 2012. "Multilateral Aspects of Managing the Capital Account," IMF Staff Discussion Notes 12/10, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. William N. Kring & William W. Grimes, 2019. "Leaving the Nest: The Rise of Regional Financial Arrangements and the Future of Global Governance," Development and Change, International Institute of Social Studies, vol. 50(1), pages 72-95, January.
    2. Steven Liao & Daniel McDowell, 2022. "Closing time: Reputational constraints on capital account policy in emerging markets," The Review of International Organizations, Springer, vol. 17(3), pages 543-568, July.
    3. Breczko, Agata & Zavaleta Hernández, Sandra Kanety, 2024. "The IMF's Return to Latin America: Build forward Better?," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 77(1), pages 37-62.
    4. William N. Kring & Kevin P. Gallagher, 2019. "Strengthening the Foundations? Alternative Institutions for Finance and Development," Development and Change, International Institute of Social Studies, vol. 50(1), pages 3-23, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nataliia Osina, 2021. "Global liquidity and capital flow regulations," Journal of Banking Regulation, Palgrave Macmillan, vol. 22(1), pages 52-72, March.
    2. Nataliia Osina, 0. "Global liquidity and capital flow regulations," Journal of Banking Regulation, Palgrave Macmillan, vol. 0, pages 1-21.
    3. Ilene Grabel, 2013. "The Rebranding of Capital Controls in an Era of Productive Incoherence," Working Papers wp318, Political Economy Research Institute, University of Massachusetts at Amherst.
    4. Ilene Grabel, 2015. "The rebranding of capital controls in an era of productive incoherence," Review of International Political Economy, Taylor & Francis Journals, vol. 22(1), pages 7-43, February.
    5. Ghosh, Atish R. & Ostry, Jonathan D. & Qureshi, Mahvash S., 2018. "Taming the Tide of Capital Flows: A Policy Guide," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262037165, April.
    6. Guzman, Martin & Ocampo, Jose Antonio & Stiglitz, Joseph E., 2018. "Real exchange rate policies for economic development," World Development, Elsevier, vol. 110(C), pages 51-62.
    7. Bank for International Settlements, 2021. "Changing patterns of capital flows," CGFS Papers, Bank for International Settlements, number 66, december.
    8. J. Ramos-Tallada., 2013. "The IMF and management of capital flows: the long road towards a pragmatic approach," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 31, pages 63-85, Autumn.
    9. Jonathan David Ostry & Atish R. Ghosh & Anton Korinek, 2012. "Multilateral Aspects of Managing the Capital Account," IMF Staff Discussion Notes 12/10, International Monetary Fund.
    10. Bilge Erten & Anton Korinek & José Antonio Ocampo, 2021. "Capital Controls: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 59(1), pages 45-89, March.
    11. Mrs. Swarnali A Hannan, 2018. "Revisiting the Determinants of Capital Flows to Emerging Markets--A Survey of the Evolving Literature," IMF Working Papers 2018/214, International Monetary Fund.
    12. Richard J. Nugent, 2019. "Restrictions on Short-Term Capital Inflows and the Response of Direct Investment," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(3), pages 350-383, June.
    13. Nicolas E. Magud & Carmen M. Reinhart & Kenneth S. Rogoff, 2018. "Capital Controls: Myth and Reality--A Portfolio Balance Approach," Annals of Economics and Finance, Society for AEF, vol. 19(1), pages 1-47, May.
    14. Aysun, Uluc & Clarke, Karlia & Small, Oronde, 2024. "Capital outflow restrictions and dollar drainage," Economic Systems, Elsevier, vol. 48(2).
    15. Pasricha, Gurnain Kaur & Falagiarda, Matteo & Bijsterbosch, Martin & Aizenman, Joshua, 2018. "Domestic and multilateral effects of capital controls in emerging markets," Journal of International Economics, Elsevier, vol. 115(C), pages 48-58.
    16. Radhika Pandey & Gurnain K. Pasricha & Ila Patnaik & Ajay Shah, 2021. "Motivations for capital controls and their effectiveness," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 391-415, January.
    17. Gelos, Gaston & Gornicka, Lucyna & Koepke, Robin & Sahay, Ratna & Sgherri, Silvia, 2022. "Capital flows at risk: Taming the ebbs and flows," Journal of International Economics, Elsevier, vol. 134(C).
    18. Fabrizio Coricelli & Zorobabel Bicaba, 2015. "Learning to open up: Capital account liberalizations in the post-Bretton Woods era," Working Papers halshs-01267264, HAL.
    19. José Antonio Ocampo, 2015. "Capital Account Liberalization and Management," WIDER Working Paper Series wp-2015-048, World Institute for Development Economic Research (UNU-WIDER).
    20. Cesar R. Van Der Laan & Marcos Tadeu C. Lélis & André Moreira Cunha, 2016. "External Capital Flows’ Management In The Great Recession: The Brazilian Experience (2007-2013)," Anais do XLII Encontro Nacional de Economia [Proceedings of the 42nd Brazilian Economics Meeting] 035, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:cnpexx:v:19:y:2014:i:3:p:445-469. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/cnpe20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.