The IMF and Economic Development

Description

Why do governments turn to the International Monetary Fund (IMF) and with what effects? This book argues that governments enter IMF programs for economic and political reasons, and finds that the effects are negative on economic growth and income distribution. By bringing in the IMF, governments gain political leverage - via conditionality - to push through unpopular policies. Note that if governments desiring conditions are more likely to participate, estimating program effects is not straightforward: one must control for the potentially unobserved political determinants of selection. This book addresses the selection problem using a dynamic bivariate version of the Heckman model analyzing cross-national time-series data. The main finding is that the negative effects of IMF programs on economic growth are mitigated for certain constituencies since programs also have distributional consequences. But IMF programs doubly hurt the least well off in society: they lower growth and shift the income distribution upward.

'A must-read for anyone who wants a better understanding of global politics and the impact of the IMF in particular.' New Statesman 'Vreeland's book is worth a look as it pieces together some interesting case studies, weaves an intriguing tale of political motives, and provides a concise and readable discussion of his attempt to measure the impact of IMF programs on economic growth.' Finance & Development 'Vreeland's The IMF and Economic Development contains novel and important findings regarding the impact of IMF programmes upon participant countries ... engaging ...' Cambridge Review of International Affairs '... this is a valuable contribution to the debate on development policies both in its specific findings and its welcome reminder that the challenges of development are still best viewed through a political economy lens.' Development and Change