Political Economy Influences Within the Life‐Cycle of IMF Programmes

Abstract

Increasing attention is being paid to political economy dimensions of the IMF's operations. However, up until now, the literature has lacked a systematic overview of how politics and economics interact in this context. This paper sets out to fill the gap. Its conceptual basis is that of the ‘life cycle’ of an IMF programme. What determines the decision to turn to the Fund for financial assistance, what determines the outcome of negotiations, what determines whether a country will come back to the Fund? Answers to these questions cannot be satisfactorily given by examining economics alone. The paper draws on existing evidence to provide an empirically based discussion of the issues involved. It also points the direction in which future research needs to go. Some of the policy implications of the analysis are also examined.

The political economy of IMF forecasts

“…Whether and to what extent the IMF will serve the interests of governments, however, depends on the power they enjoy at the Fund, and the support they receive from other powerful members (Dreher 2004). 7 As Bird and Rowlands (2003) argue, a government's power to negotiate depends greatly on the willingness of other countries to support it. So, governments with a large share of the votes at the IMF are likely to receive beneficial treatment, as are countries closely allied with these powerful countries.…”

Independent Actor or Agent? An Empirical Analysis of the Impact of US Interests on IMF Conditions

“…Moreover, a country's power to negotiate is influenced by other countries' willingness to support the potential borrowers (Bird and Rowlands 2003). Both a country's own (direct) influence in the Fund and support by other countries rise with its GDP, since countries with higher GDP are more important for the world economy.…”

Financial Restructuring and Economic Growth in Thailand

“…10 For a recent critical assessment of the IMF and World Bank policies, see Jomo (2003). 11 Bird and Rowlands (2003) consider the political economy aspects of the IMF policies. 12 Zhang (2003) argues that differences in financial liberalization strategies employed by various Asian economies explain the uneven impact of crisis on various economies.…”