By James Raymond Vreeland
Why do governments flip to the foreign financial Fund (IMF) and with what results? during this booklet, James Vreeland examines this query by way of studying cross-national time-series information from through the global. Vreeland argues that governments input into IMF courses for financial and political purposes, and he unearths that the courses damage monetary progress and redistribute source of revenue upward. via bringing within the IMF, governments achieve political leverage - through conditionality - to push via unpopular rules. For yes constituencies, those guidelines hose down the results of undesirable financial functionality through redistributing source of revenue. yet IMF courses doubly damage others who're much less well to do: They decrease progress and exacerbate source of revenue inequality.
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Extra resources for The IMF and Economic Development
When the military held elections for a new civilian regime, in November 1984, the ﬁscal deﬁcit had risen again. By this time, both the Blanco and the Colorado parties had changed their views on the state’s role in the economy – they wanted it reduced. The Colorado party won the presidency and pressed for rapid liberalization, signing with the IMF in September 1985. But with the end of dictatorship, opponents of IMF-style austerity were ´ allowed to organize legally again (Filgueira and Papadopulos 1997: 365).
Government preferences over IMF conditionality may have been the deciding factor. To gain analytical leverage over how the desire for IMF conditions may enter into the decision-making process, I choose two stark examples from sets of observations noted above. 3. This table identiﬁes three types of cases (for countries observed participating and those not participating): countries with extremely low reserves, countries with typical reserves, and countries with extremely high reserves. 3 as having extremely high foreign reserves and no agreement, or cases like Guyana, which appears as one of the countries with extremely low reserves while under agreement.
During this period the negotiation posture of the IMF was weak, and it was willing to grant soft conditions to the government of Tanzania. Essentially, the Fund needed business. In the late 1970s, the Fund gradually changed its major operations from regulating currency to more strictly managing balance of payments difﬁculties. The organization became more involved than ever before in national policies. By 1980, the number of countries with IMF agreements had climbed back up. The negotiation posture of the Fund was tougher, so Tanzania had to work harder for lenient conditions.
The IMF and Economic Development by James Raymond Vreeland