Hostname: page-component-cd9895bd7-dk4vv Total loading time: 0 Render date: 2024-12-29T08:10:14.282Z Has data issue: false hasContentIssue false
  • English
  • Français

Playing Favorites: How Shared Beliefs Shape the IMF's Lending Decisions

Published online by Cambridge University Press:  24 April 2014

Stephen C. Nelson
Get access

Abstract

International organizations (IOs) suffuse world politics, but the International Monetary Fund (IMF) stands out as an unusually important IO. My research suggests that IMF lending is systematically biased. Preferential treatment is largely driven by the degree of similarity between beliefs held by IMF officials and key economic policy-makers in the borrowing country. This article describes the IMF's ideational culture as “neoliberal,” and assumes it to be stable during the observation window (1980–2000). The beliefs of top economic policy-makers in borrowing countries, however, vary in terms of their distance from IMF officials' beliefs. When fellow neoliberals control the top economic policy posts the distance between the means of the policy team's beliefs and the IMF narrows; consequently, IMF loans become less onerous, more generous, and less rigorously enforced. I gathered data on the number of conditions and the relative size of loans for 486 programs in the years between 1980 and 2000. I collected data on waivers, which allow countries that have missed binding conditions to continue to access funds, as an indicator for enforcement. I rely on indirect indicators, gleaned from a new data set that contains biographical details of more than 2,000 policy-makers in ninety developing countries, to construct a measure of the proportion of the top policy officials that are fellow neoliberals. The evidence from a battery of statistical tests reveals that as the proportion of neoliberals in the borrowing government increases, IMF deals get comparatively sweeter.

Type
Research Article
Information
International Organization , Volume 68 , Issue 2 , Spring 2014 , pp. 297 - 328
Copyright
Copyright © The IO Foundation 2014 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, Daron, Johnson, Simon, Querubin, Pablo, and Robinson, James. 2008. When Does Policy Reform Work? The Case of Central Bank Independence. Brookings Papers on Economic Activity (Spring):351–429.CrossRefGoogle Scholar
Babb, Sarah L. 2003. The IMF in Sociological Perspective: A Tale of Organizational Slippage. Studies in Comparative International Development 38 (2):3–27.CrossRefGoogle Scholar
Babb, Sarah L., and Carruthers, Bruce G.. 2008. Conditionality: Forms, Function, and History. Annual Review of Law and Social Science 4:13–29.CrossRefGoogle Scholar
Barnett, Michael, and Coleman, Liv. 2005. Designing Police: Interpol and the Study of Change in International Organizations. International Studies Quarterly 49 (4):593–619.Google Scholar
Barnett, Michael, and Finnemore, Martha. 1999. The Politics, Power, and Pathologies of International Organizations. International Organization 53 (4):699–732.CrossRefGoogle Scholar
Barnett, Michael, and Finnemore, Martha. 2004. Rules for the World: International Organizations in Global Politics. Ithaca, NY: Cornell University Press.Google Scholar
Barro, Robert, and Lee, Jong-Wha. 2005. IMF Programs: Who Is Chosen, and What Are the Effects? Journal of Monetary Economics 52 (7):1245–69.Google Scholar
Beck, Nathaniel. 2001. Time-Series Cross-Section Data: What Have We Learned in the Past Few Years? Annual Review of Political Science 4:271–93.CrossRefGoogle Scholar
Beck, Nathaniel, Katz, Jonathan, and Tucker, Richard. 1998. Beyond Ordinary Logit: Taking Time Seriously in Binary Time-Series Cross-Section Models. American Journal of Political Science 42 (4):1260–88.Google Scholar
Beck, Thorsten, Clarke, George, Groff, Alberto, Keefer, Philip, and Walsh, Patrick. 2001. New Tools in Comparative Political Economy: The Database of Political Institutions. World Bank Economic Review 15 (1):165–76.Google Scholar
Besley, Timothy, and Reynal-Querol, Marta. 2011. Do Democracies Select More Educated Leaders? American Political Science Review 105 (3):552–66.Google Scholar
Caraway, Teri, Rickard, Stephanie J., and Anner, Mark S.. 2012. International Negotiations and Domestic Politics: The Case of IMF Labor Market Conditionality. International Organization 66 (1):27–61.Google Scholar
Centeno, Miguel. 1993. The New Leviathan: The Dynamics and Limits of Technocracy. Theory and Society 22 (3):307–35.CrossRefGoogle Scholar
Chorev, Nitsan, and Babb, Sarah. 2009. A Crisis of Neoliberalism and the Future of International Institutions: A Comparison of the IMF and the WTO. Theory and Society 38 (5):459–84.CrossRefGoogle Scholar
Chwieroth, Jeffrey. 2007. Neoliberal Economists and Capital Account Liberalization in Emerging Markets. International Organization 61 (2):443–63.CrossRefGoogle Scholar
Chwieroth, Jeffrey. 2010. Capital Ideas: The IMF and the Rise of Financial Liberalization. Princeton, NJ: Princeton University Press.Google Scholar
Chwieroth, Jeffrey. 2013. “The Silent Revolution”: How the Staff Exercise Informal Governance over IMF Lending. Review of International Organizations 8 (2):265–90.Google Scholar
Colander, David. 2005. The Making of an Economist Redux. Journal of Economic Perspectives 19 (1):175–98.CrossRefGoogle Scholar
Colander, David, and Brenner, Reuven, eds. 1992. Educating Economists. Ann Arbor: University of Michigan Press.Google Scholar
Colander, David, and Klamer, Arjo. 1987. The Making of an Economist. Journal of Economic Perspectives 1 (2):95–111.CrossRefGoogle Scholar
Copelovitch, Mark. 2010. The International Monetary Fund in the Global Economy. New York: Cambridge University Press.Google Scholar
Davis, Paul, and Papanek, Gustav F.. 1984. Faculty Ratings of Major Economic Departments by Citations. American Economic Review 74 (1):225–30.Google Scholar
Di Tella, Rafael, and MacCulloch, Robert. 2009. Why Doesn't Capitalism Flow to Poor Countries? Brookings Papers on Economic Activity 401 (Spring):285–321.Google Scholar
Dixit, Avinash. 1996. The Making of Economic Policy: A Transaction-Cost Politics Perspective. Cambridge, MA: MIT Press.CrossRefGoogle Scholar
Dreher, Axel. 2004. The Influence of IMF Programs on the Re-election of Debtor Governments. Economics and Politics 16 (1):53–76.CrossRefGoogle Scholar
Dreher, Axel, and Jensen, Nathan. 2007. Independent Actor of Agent? An Empirical Analysis of the Impact of US Interests on IMF Conditions. Journal of Law and Economics 50 (1):105–24.Google Scholar
Dreher, Axel, and Vaubel, Roland. 2004. The Causes and Consequences of IMF Conditionality. Emerging Markets Finance and Trade 40 (3):26–54.Google Scholar
Dusansky, Richard, and Vernon, Clayton J.. 1998. Rankings of US Economics Departments. Journal of Economic Perspectives 12 (1):157–70.Google Scholar
Fearon, James, and Laitin, David. 2003. Ethnicity, Insurgency, and Civil War. American Political Science Review 97 (1):75–90.Google Scholar
Fourcade, Marion. 2006. The Construction of a Global Profession: The Transnationalization of Economics. American Journal of Sociology 112 (1):145–94.CrossRefGoogle Scholar
Fourcade, Marion. 2009. Economists and Societies: Discipline and Profession in the United States, Britain, and France, 1890s to 1990s. Princeton, NJ: Princeton University Press.Google Scholar
Fox, Craig R., and See, Kelly E.. 2003. Belief and Preference in Decision Under Uncertainty. In Thinking: Psychological Perspectives on Judgment and Decision Making, edited by Hardman, David and Macchi, Laura, 273–314. Mahwah, NJ: John Wiley and Sons.CrossRefGoogle Scholar
Gartzke, Erik. 2006. The Affinity of Nations Index, 1946–2002. Version 4.0 (March).Google Scholar
Gould, Erica. 2006. Money Talks: The International Monetary Fund, Conditionality, and Supplementary Financiers. Palo Alto, CA: Stanford University Press.Google Scholar
Graves, Phillip E., Marchand, James, and Thompson, Randall. 1982. Economics Departmental Rankings: Incentives, Constraints, and Efficiency. American Economic Review 72 (5):1131–41.Google Scholar
Haas, Ernst B. 1990. When Knowledge Is Power: Three Models of Change in International Organizations. Berkeley: University of California Press.Google Scholar
Hay, Colin. 2007. The Genealogy of Neoliberalism. In Neoliberalism: National and Regional Experiments with Global Ideas, edited by Roy, Ravi K., Denzau, Arthur, and Willett, Thomas, 51–70. New York: Routledge.Google Scholar
Hirsch, Barry T., Austin, Randall, Brooks, John, and Moore, J. Bradley. 1984. Economics Departmental Rankings: Comment. American Economic Review 74 (4):822–26.Google Scholar
Hogan, Timothy D. 1984. Economics Departmental Rankings: Comment. American Economic Review 74 (4):827–33.Google Scholar
International Monetary Fund (IMF). 1978. Conditionality in the Upper Credit Tranches—Suggested Guidelines. Memorandum to the Executive Board, SM/78/296, 15 December 1978. Washington, DC: International Monetary Fund.Google Scholar
International Monetary Fund (IMF). 1997. Review of Experiences under ESAF-Supported Arrangement—Staff Studies, Volume 2. Staff Memorandum for the Executive Board, EBS/97/112, Supplement 2, 7 July 1997. Washington, DC: International Monetary Fund.Google Scholar
International Monetary Fund (IMF). 2000. Report to the IMF Executive Board of the Quota Formula Review Group. 28 April. Available at <http://www.imf.org/external/np/tre/quota/2000/eng/qfrg/report/dload/EBAP52.pdf>. Accessed 16 November 2012..+Accessed+16+November+2012.>Google Scholar
International Monetary Fund (IMF). Independent Evaluation Office. 2004. The IMF and Argentina, 1991–2001. Washington, DC: International Monetary Fund.Google Scholar
Kahler, Miles. 1992. External Influence, Conditionality, and the Politics of Adjustment. In The Politics of Economic Adjustment, edited by Haggard, Stephan and Kaufman, Robert, 89–136. Princeton, NJ: Princeton University Press.Google Scholar
Keefer, Philip, and Stasavage, David. 2003. The Limits of Delegation: Veto Players, Central Bank Independence, and the Credibility of Monetary Policy. American Political Science Review 97 (3):407–23.Google Scholar
Klamer, Arjo, and Colander, David. 1990. The Making of an Economist. Boulder, CO: Westview.Google Scholar
Kogut, Bruce, and Macpherson, J. Muir. 2008. The Decision to Privatize: Economists and the Construction of Ideas and Policies. In The Global Diffusion of Markets and Democracy, edited by Simmons, Beth, Dobbin, Frank, and Garrett, Geoffrey, 104–40. New York: Cambridge University Press.CrossRefGoogle Scholar
Krueger, Anne. 2003. IMF Stabilization Programs. In Economic and Financial Crises in Emerging Market Economies, edited by Feldstein, Martin, 297–346. Chicago: University of Chicago Press.Google Scholar
March, James G. 1991. How Decisions Happen in Organizations. Human-Computer Interaction 6 (2):95–117.CrossRefGoogle Scholar
March, James G. 1994. A Primer on Decision Making: How Decisions Happen. New York: Free Press.Google Scholar
March, James G., and Olsen, Johan P.. 1998. The Institutional Dynamics of International Political Orders. International Organization 52 (4):943–69.Google Scholar
Marshall, Monty G., and Jaggers, Keith. 2007. Polity IV Project: Political Regime Characteristics and Transitions, 1800–2006. Dataset Users' Manual. Center for Systemic Peace. Available at <http://home.bi.no/a0110709/PolityIV_manual.pdf>. Accessed 16 November 2012..+Accessed+16+November+2012.>Google Scholar
Martin, Lisa. 2006. Distribution, Information, and Delegation to International Organizations: The Case of IMF Conditionality. In Delegation and Agency in International Organizations, edited by Hawkins, Darren G., Lake, David A., Nielson, Daniel L., and Tierney, Michael J., 140–64. New York: Cambridge University Press.Google Scholar
Momani, Bessma. 2005. Recruiting and Diversifying IMF Technocrats. Global Society 19 (2):167–87.Google Scholar
Morrisson, Christian, and Murtin, Fabrice. 2009. The Century of Education. CEE Discussion Papers 109. Centre for the Economics of Education. London: London School of Economics and Political Science.Google Scholar
Nelson, Stephen C. 2009. Creating Credibility: The International Monetary Fund and the Neoliberal Revolution in the Developing World. PhD diss., Cornell University, Cornell, NY.Google Scholar
Nelson, Stephen C. 2010. Does Compliance Matter? Assessing the Relationship Between Sovereign Risk and Compliance with International Monetary Law. Review of International Organizations 5 (2):107–39.CrossRefGoogle Scholar
Oatley, Thomas, and Yackee, Jason. 2004. American Interests and IMF Lending. International Politics 41 (3):415–29.CrossRefGoogle Scholar
Page, Scott E. 2008. Uncertainty, Difficulty, and Complexity. Journal of Theoretical Politics 20 (2):115–49.Google Scholar
Patten, Alan. 2011. Rethinking Culture: The Social Lineage Account. American Political Science Review 105 (4):735–49.Google Scholar
Polak, Jacques J. 1991. The Changing Nature of IMF Conditionality. Essays in International Finance, 184. Princeton, NJ: Princeton University.Google Scholar
Pop-Eleches, Grigore. 2009. Public Goods or Political Pandering: Evidence from IMF Programs in Latin America and Eastern Europe. International Studies Quarterly 53 (3):787–816.CrossRefGoogle Scholar
Ray, James Lee. 2003. Explaining Interstate Conflict and War: What Should We Control For? Conflict Management and Peace Science 20 (1):1–31.Google Scholar
Rodrik, Dani. 1989. Promises, Promises: Credible Policy Reform via Signaling. Economic Journal 99 (397):756–72.Google Scholar
Schein, Edgar H. 1990. Organizational Culture. American Psychologist 45 (2):109–19.Google Scholar
Schultz, Kenneth, and Weingast, Barry. 2003. The Democratic Advantage: Institutional Foundations of Financial Power in International Competition. International Organization 57 (1):3–42.Google Scholar
Scott, Loren C., and Mitias, Peter. 1996. Trends in Rankings of Economic Departments in the US: An Update. Economic Inquiry 34 (2):378–400.Google Scholar
Stiglitz, Joseph. 2003. Globalization and Its Discontents. New York: Norton.Google Scholar
Stone, Randall. 2002. Lending Credibility: The International Monetary Fund and the Post-Communist Transition. Princeton, NJ: Princeton University Press.Google Scholar
Stone, Randall. 2004. The Political Economy of IMF Lending in Africa. American Political Science Review 98 (4):577–91.Google Scholar
Stone, Randall. 2008. The Scope of IMF Conditionality. International Organization 62 (4):589–620.Google Scholar
Stone, Randall. 2011. Controlling Institutions: International Organizations and the Global Economy. New York: Cambridge University Press.Google Scholar
Swedberg, Richard. 1986. The Doctrine of Economic Neutrality of the IMF and the World Bank. Journal of Peace Research 23 (4):377–90.Google Scholar
Tenembaum, Ernesto. 2004. Enemigos: Argentina y el FMI: La Apasionante Discusion entre un Periodista y uno de los Hombres Clave del Fondo en los Noventa. Buenos Aires: Grupo Editorial Norma.Google Scholar
Thacker, Strom. 1999. The High Politics of IMF Lending. World Politics 52 (1):38–75.Google Scholar
Tomz, Michael. 2007. Reputation and International Cooperation: Sovereign Debt Across Three Centuries. Princeton, NJ: Princeton University Press.Google Scholar
Tomz, Michael, Wittenberg, Jason, and King, Gary. 2001. CLARIFY: Software for Interpreting and Presenting Statistical Results. Journal of Statistical Software. Available at <http://gking.harvard.edu/clarify>. Accessed 16 November 2012..+Accessed+16+November+2012.>Google Scholar
US Agency for International Development (USAID). 2012. US Overseas Loans and Grants: Obligations and Loan Authorizations, July 1, 1945–September 30, 2010. Available at <http://gbk.eads.usaidallnet.gov/data/detailed.html>. Accessed 16 November 2012..+Accessed+16+November+2012.>Google Scholar
van de Walle, Nicolas. 2001. African Economies and the Politics of Permanent Crisis, 1979–1999. New York: Cambridge University Press.Google Scholar
Van den Steen, Eric. 2010. Culture Clash: The Costs and Benefits of Homogeneity. Management Science 56 (10):1718–38.Google Scholar
van der Veer, Koen, and de Jung, Eelke. 2006. Paris Club Involvement: Helping or Harming IMF's Attempts to Catalyse Private Capital Flows? Unpublished manuscript, Radboud University, Nijmegen, the Netherlands.Google Scholar
Vetterlein, Antje. 2010. Lacking Ownership: The IMF and Its Engagement with Social Development as a Policy Norm. In Owning Development: Creating Policy Norms in the IMF and the World Bank, edited by Park, Susan and Vetterlein, Antje, 93–112. New York: Cambridge University Press.Google Scholar
Vreeland, James. 2003. The IMF and Economic Development. New York: Cambridge University Press.Google Scholar
Wacziarg, Romain, and Welch, Karen. 2008. Trade Liberalization and Growth: New Evidence. World Bank Economic Review 22 (2):187–231.CrossRefGoogle Scholar
World Bank. 2012. World Development Indicators. Washington, DC: World Bank. Available at <http://data.worldbank.org/data-catalog/world-development-indicators>. Accessed 16 November 2012..+Accessed+16+November+2012.>Google Scholar
Woods, Ngaire. 2006. The Globalizers: The IMF, the World Bank, and Their Borrowers. Ithaca, NY: Cornell University Press.Google Scholar
Supplementary material: File

Nelson and Katzenstein supplementary material

Supplementary data files

Download Nelson and Katzenstein supplementary material(File)
File 228.6 KB