IMF conditionality and development policy space, 1985–2014

In recent years, the International Monetary Fund (IMF) has re-emerged as a central actor in global economic governance. Its rhetoric and policies suggest that the organization has radically changed the ways in which it offers financial assistance to countries in economic trouble. We revisit two long-standing controversies: Has the policy content of IMF programmes evolved to allow for more policy space? Do these programmes now allow for the protection of labour and social policies? We collected relevant archival material on the IMF's lending operations and identified all policy conditionality in IMF loan agreements between 1985 and 2014, extracting 55,465 individual conditions across 131 countries in total. We find little evidence of a fundamental transformation of IMF conditionality. The organization's post-2008 programmes reincorporated many of the mandated reforms that the organization claims to no longer advocate and the number of conditions has been increasing. We also find that policies introduced to ameliorate the social consequences of IMF macroeconomic advice have been inadequately incorporated into programme design. Drawing on this evidence, we argue that multiple layers of rhetoric and ceremonial reforms have been designed to obscure the actual practice of adjustment programmes, revealing an escalating commitment to hypocrisy.The authors gratefully acknowledge funding by the Institute for New Economic Thinking (INET Grant INO13-00020: ‘The Political Economy of Structural Adjustment’), the Cambridge Political Economy Society Trust, and the Centre for Business Research at the University of Cambridge

Small donors in world politics: The role of trust funds in the foreign aid policies of Central and Eastern European donors

The Central and Eastern European (CEE) EU member states have emerged as new donors of international development assistance since the turn of the millennium. The literature has tended to focus on the bilateral components of these policies, and neglected CEE multilateral aid. This paper contributes to filling this gap by examining how and why CEE donors contribute to trust funds operated by multilateral donors. The aim of the paper is twofold: First, it provides a descriptive account of how CEE countries use trust funds in the allocation of their foreign aid. Second, it explains this allocation using data from qualitative interviews with CEE officials. CEE countries make much less use of trust funds than might be expected. This is due not only to the loss of visibility and control over their resources, but also to how CEE companies and non-governmental organisations (NGOs) rarely achieve funding successes at multilateral organisations

International demands for austerity: examining the impact of the IMF on the public sector

What effects do International Monetary Fund (IMF) loans have on borrow-ing countries? Even after decades of research, no consensus exists. We offer a straight-forward explanation for the seemingly mixed effects of IMF loans. We argue thatdifferent loans have different effects because of the varied conditions attached to IMFfinancing. To demonstrate this point, we investigate IMF loans with and withoutconditions that require public sector reforms in exchange for financing. We find thatthe addition of a public sector reform condition to a country’s IMF program signifi-cantly reduces government spending on the public sector wage bill. This evidencesuggest that conditions are a key mechanism linking IMF lending to policy outcomes.Although IMF loans with public sector conditions prompt cuts to the wage bill in theshort-term, these cuts do not persist in the longer-term. Borrowers backslide oninternationally mandated spending cuts in response to domestic political pressures

The social aftermath of economic disaster: Karl Polanyi, countermovements in action, and the Greek crisis

The economic crisis in Greece resulted in high unemployment and the dismantlement of social protection policies. How does society respond to the collapse of both welfare-state and market mechanisms? I examine these issues through the study of one working class community in Athens over 2012-13. Since the onset of the crisis, my informants experienced a simultaneous drop in living standards, loss of social status, and debasement of their symbolic construction of reality. To respond to these pressures, they relied on a combination of material survival strategies, the reconfiguration of social resources, and the reconstruction of cultural imaginaries. To explain these findings, the article draws on Karl Polanyi's analysis of countermovements to marketization and commodification. I argue in favour of augmenting the definition of countermovements to capture local-level responses, emphasising cultural aspects of social protection, and tracing the micro-foundations of countermovements that are nonetheless shaped by the macro-institutional context shaping action. This reading of Polanyi's work seeks to integrate many moving-and potentially contradictory-parts into a holistic analysis of societal responses to rapid and radical socioeconomic change

The politics of world polity: Script-writing in international organizations

Sociologists have long examined how states, intergovernmental organizations (IGOs), international nongovernmental organizations (INGOs), and professional groups interact in order to institutionalize their preferred norms at the transnational level. Yet, explanations of global norm-making that emphasize inter-organizational negotiations do not adequately explain the intra-organizational script-writing—that is, the codification of norms in prescriptive behavioral templates—that underpins this process. This article opens the black box of how scripts emerge and institutionalize within IGOs. Script-writing is a function of both world-cultural frames and material interests, held by different intra-organizational actors: scientific IGO staff and state representatives in governing bodies, respectively. The interplay between these frames and interests determines whether scripts will institutionalize. In this theoretical model, world-cultural and power-political explanations are pertinent to different, mutually informing, and coexisting aspects of the script-writing process. As a corollary of our approach, we present a conceptual framework for the study of intra-IGO script-writing, which is contingent on three normative struggles: among IGO staff, within an IGO’s board of directors, and between the staff and the board. To empirically substantiate our arguments, we examine scripts on taxation and capital controls by the International Monetary Fund. We conclude by discussing the broader implications of our model for the study of international organizations and the engines of global norm-making

Catalyzing Aid? The IMF and Donor Behavior in Aid Allocation

This is the author accepted manuscript. The final version is available from Elsevier via http://dx.doi.org/10.1016/j.worlddev.2015.10.010The International Monetary Fund (IMF) has often asserted that its programs encourage aid by signaling policy credibility, commonly referred to as aid catalysis. Our study investigates this claim for sector-specific aid and for bilateral and multilateral donors using data on 136 recipient countries for the 1986–2009 period. We employ a two-part quantitative model to match the donor decision-making process, consisting of a first-stage recipient selection equation and a second-stage allocation equation on selected recipients. We find strong support that IMF programs catalyze aid on aggregate, but the evidence varies across different types of aid. Aid catalysis is stronger and more robust in sectors linked to the IMF’s core competency areas, namely debt-related relief and general budget support, but weaker and less robust for infrastructure, production, multisector, and humanitarian aid, and non-existent for health and education. Across donors, IMF programs are associated with increases in aid by countries with larger voting shares in the IMF, such as the United States and Japan, but less so by countries with few votes or for multilateral agencies. This finding is consistent with research in international political economy arguing that the IMF’s powerful stakeholders drive the organization’s decisions and policies. Taken together, our findings emphasize the IMF’s multi-dimensional impact on the global development agenda—an erstwhile overlooked factor in studies of aid allocation—while refuting the purported positive effects of IMF programs on aid for social policy.The authors acknowledge funding by the Institute for New Economic Thinking (INET Grant INO13-00020: “The Political Economy of Structural Adjustment”)

Impact of International Monetary Fund programs on child health

Parental education is located at the center of global efforts to improve child health. In a developing-country context, the International Monetary Fund (IMF) plays a crucial role in determining how governments allocate scarce resources to education and public health interventions. Under reforms mandated by IMF structural adjustment programs, it may become harder for parents to reap the benefits of their education due to wage contraction, welfare retrenchment, and generalized social insecurity. This study assesses how the protective effect of education changes under IMF programs, and thus how parents' ability to guard their children's health is affected by structural adjustment. We combine cross-sectional stratified data (countries, 67; children, 1,941,734) from the Demographic and Health Surveys and the Multiple Indicator Cluster Surveys. The sample represents ∼2.8 billion (about 50%) of the world's population in year 2000. Based on multilevel models, our findings reveal that programs reduce the protective effect of parental education on child health, especially in rural areas. For instance, in the absence of IMF programs, living in an household with educated parents reduces the odds of child malnourishment by 38% [odds ratio (OR), 0.62; 95% CI, 0.66-0.58]; in the presence of programs, this drops to 21% (OR, 0.79; 95% CI, 0.86-0.74). In other words, the presence of IMF conditionality decreases the protective effect of parents' education on child malnourishment by no less than 17%. We observe similar adverse effects in sanitation, shelter, and health care access (including immunization), but a beneficial effect in countering water deprivation