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Economic stabilization, conditionality, and political stability

Published online by Cambridge University Press:  22 May 2009

Henry S. Bienen  and
Mark Gersovitz
Henry S. Bienen
Affiliation:
James S. McDonnell Distinguished University Professor of Politics and International Affairs and Director of the Center of International Studies at Princeton University, Princeton, New Jersey.
Mark Gersovitz
Affiliation:
Senior Research Economist in the Woodrow Wilson School of Public and International Affairs at Princeton University, Princeton, New Jersey.
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Abstract

IMF conditionality is seldom so important that it dominates all other considerations for political stability. IMF stabilization programs often shift benefits from one group to another. They expose elites to charges of selling the sovereignty of their countries. The imposition of IMF conditions, particularly subsidy cuts, may lead to sharp outbreaks of civil disorder. Nonetheless, the IMF provides resources that make adjustment easier and thus may lessen the chances of political instability for a country. IMF programs are seldom implemented fully as negotiated, and the penalties for partial compliance are not great. Debtor countries have more flexibility in imposing austerity measures, and the economic constraints are less binding than often assumed. The very availability of alternatives to IMF programs results in internal divisions because some favor debt repudiation and others oppose it. Groups now contend over solutions to the debt problems of their countries.

Type
Global Debt and National Policy
Information
International Organization , Volume 39 , Issue 4 , Autumn 1985 , pp. 729 - 754
Copyright
Copyright © The IO Foundation 1985

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References

1. Policy makers with as different ideological and political perspectives as U.S. Secretary of State George Shultz, on the one hand, and President Julius Nyerere of Tanzania and the former prime minister of Jamaica, Michael Manley, on the other, have worried about the implications of IMF conditionality for political stability. See Shultz, , “Restoring Prosperity to the World Economy,” statement before the Foreign Relations Committee, 15 February 1983, published as Current Policy no. 451 (Washington, D.C.: U.S. Department of State, Bureau of Public Affairs, 1983Google Scholar). For Nyerere's views see “No to IMF Meddling,” Development Dialogue no. 2 (1980), pp. 7–9Google Scholar. For Manley's see ibid. For academic analysis see Malloy, James M., ed., Authoritarianism and Corporatism in Latin America (Pittsburgh: University of Pittsburgh Press, 1977)Google Scholar, and Economic Stabilization in Latin America: Political Dimensions, a special issue of World Development 8 (November 1980).

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