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Do External Interventions Work? The Case of Trade Reform Conditions in IMF Supported Programs

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  • Shang-Jin Wei
  • Zhiwei Zhang

Abstract

Trade reform conditions are common in IMF supported programs. Of the 99 countries that had IMF programs during 1993-2003, 77 had conditions on trade reforms 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 trade conditions in IMF programs has not been systematically studied. Using a unique dataset, this paper provides such an assessment. It finds that trade conditions are associated with an increase in trade openness on average, but the effect comes mostly from countries that, by some measure, have a high degree of "willingness to reform."

Suggested Citation

  • Shang-Jin Wei & Zhiwei Zhang, 2006. "Do External Interventions Work? The Case of Trade Reform Conditions in IMF Supported Programs," NBER Working Papers 12667, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:12667
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    References listed on IDEAS

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    1. Rose, Andrew K., 2004. "Do WTO members have more liberal trade policy?," Journal of International Economics, Elsevier, vol. 63(2), pages 209-235, July.
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    5. repec:rus:hseeco:123558 is not listed on IDEAS
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    10. 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.
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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. Pierre-Louis Vézina, 2014. "Race-to-the-bottom Tariff Cutting," Review of International Economics, Wiley Blackwell, vol. 22(3), pages 444-458, August.
    6. 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.
    7. Alice Sindzingre, 2016. "'Policy Externalisation' Inherent Failure: International Financial Institutions' Conditionality in Developing Countries," CEsA Working Papers 142, CEsA - Center for African, Asian and Latin American Studies.
    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

    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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