One of the most important developments in the world economy during the past three decades has been the willingness of governments in emerging markets to liberalize controls over international capital movements-a process known as capital account liberalization+ What accounts for this trend? While existing research highlights a number of important factors, it neglects the role played by the rise and spread of neoliberal ideas that prioritized liberalization as a policy choice+ Extending the literature on epistemic communities, I argue one critical mechanism shaping policy decisions is the formation of a coherent team of neoliberal economists+ Using a new data set that codes the professional training of more than 1500 policymakers in emerging markets, I assess the relative importance of this argument quantitatively on a sample of twenty-nine emerging markets from 1977 to 1999+ In order to assess the independent effect of neoliberal economists, I also take into account the endogeneity of the appointment process, assessing whether appointments are driven by credibility concerns, political interests, or economic conditions+ I also stress that a fuller understanding of the appointment process necessitates a focus on the social environment in which appointments are situated+ One of the most important developments in the world economy during the past three decades has been the willingness of governments in emerging markets to open up their economies to global markets+ A significant element of this opening has been the liberalization of capital controls-a process known as capital account

This paper examines how the staff exercise informal governance over lending decisions of the International Monetary Fund (IMF or Fund). The essential component of designing any IMF program, assessing the extent to which a borrowing country is likely to fulfil its policy commitments, is based partly on informal staff judgments subject to informal incentives and normative orientations not dictated by formal rules and procedures. Moreover, when country officials are unable to commit to policy goals of the IMF, the IMF staff may bypass the formal channel of policy dialogue through informal contacts and negotiations with more like-minded actors outside the policymaking process. Exercising informal governance in these ways, the staff are motived by informal career advancement incentives and normative orientations associated with the organization's culture to provide favourable treatment to borrowers composed of policy teams sympathetic toward their policy goals. The presence of these sympathetic interlocutors provides the staff both with greater confidence a lending program will achieve success and an opportunity to support officials who share their policy beliefs. I assess these arguments using a new dataset that proxies shared policy beliefs based on the professional characteristics of IMF staff and developing country officials. The evidence supports these arguments: larger loan commitments are extended to countries where government officials and the Fund staff share similar professional training. The analysis implies informal governance operates in IOs not just via state influence but also through the evolving makeup, incentive structure, and normative orientations of their staffs.

How much weight should be assigned to a particular factor in explaining an outcome? How should an abstract concept be linked to empirical indicants? These methodological problems—known as the “how much” and “how to” problems, respectively—have raised serious obstacles for ideational researchers. However, they have generally failed to deal with these problems adequately. To offset the limitations of existing studies, this paper provides new methodological guidance to researchers confronting these problems. In particular, quantitative methods are suggested for managing the “how much” problem, and a new indicator based on an individual's organizational background is proposed to deal with the “how to” problem. To develop the argument, this guidance is applied to examine the effect and measurement of the emergence within the International Monetary Fund of neoliberal ideas prescribing liberalization of capital controls.

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How do crises lead to change? Rationalist approaches to the question that emphasize inexorable structural responses and the pursuit of distributive preferences by newly dominant coalitions are inadequate because they obscure the social mediation of material events and the pervasive uncertainty that follows destabilization of the precrisis status quo. The latter constrains actors from fully grasping their distributive preferences. Until uncertainty is reduced, persuasion emerges as a key mechanism of change. Although constructivist approaches emphasize persuasive practices, they have yet to adequately specify the scope conditions underpinning the selection of new ideas. This article goes beyond much of the constructivist focus on domestic legitimacy and static notions of resonance by emphasizing external credibility and dynamic processes of resonance-building by norm entrepreneurs. The author specifies four features—what he calls the four Cs of crisis resolution—that shape the process of idea selection: carriers, composition, crossover appeal, and credibility. Developing these arguments in the case of the early years of New Order Indonesia, the article suggests that whenever a prominent and cohesive group of advocates promotes an idea that has sufficient ideational and distributive appeal and the endorsement of external actors whose seal of approval is perceived as important, intersubjective belief change, and thus institutional and policy change, is more likely.

Beginning in the mid‐1980s, in the absence of active encouragement from the IMF’s management or member states, the staff began to encourage the liberalization of capital controls as a norm. This behavior constitutes a puzzle for the conventional wisdom, which sees the “Wall Street‐Treasury Complex” as responsible for the IMF’s approach, as well as a blind spot for rationalist approaches, which offer little insight into processes that shape preference formation “from within” international organizations (IOs). In a context where the Fund’s member states permitted the staff considerable discretion and autonomy, I argue the staff’s initial adoption of the norm of capital freedom was largely shaped by three internal processes: administrative recruitment, adaptation, and learning. But norm adoption did not mean the end of internal discussion, and a vigorous debate emerged between “gradualists” and supporters of the “big bang” over how the norm should be interpreted and applied. In this “battle of ideas,” I emphasize the critical role of internal entrepreneurship.

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What accounts for the spread of Sovereign Wealth Funds (SWFs)? Despite the increasing importance of SWFs in the global economy, we lack persuasive systematic answers to that question. Most analysts take for granted that economic imperatives drive the creation of SWFs; governments create them as effective solutions to the challenges generated by reserve accumulation and commodity-export specialization. In this article, I argue that the evidence fails to support this theory. Instead, the spread of SWFs best resembles the diffusion of a fashion or fad. SWFs became fashionable as an appropriate approach for reserve-and resource-rich countries seeking to manage policy uncertainty related to these economic characteristics. As other countries developed the same characteristics, they followed the lead of their peers and also created SWFs. I provide, with the use of a new data set, the first cross-national political-economy statistical analysis of SWF creation. The results suggest peer group emulation has, indeed, been crucial in shaping the decision of many countries to create SWFs-especially in fuel-exporting countries.