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2016 | Book

The IMF, LIDC Reform, and the Post-Washington Consensus Read chapter Read first chapter

Poor States, Power and the Politics of IMF Reform

Drivers of Change in the Post- Washington Consensus

Author: Mark Hibben

Publisher: Palgrave Macmillan UK

Book Series : International Political Economy Series

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft" , Springer Professional "Technik"

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About this book

This books provides a timely comparative case study that reveals the factors driving the International Monetary Fund's policy reform in Low Income Developing Countries (LIDCs), as a resurgent IMF expands its footprint in the world's poorest states. Through a research design that employs both mainstream and critical IPE theory, Mark Hibben uncovers three major tendencies. Principal-agent analysis, he argues, demonstrates that coalition formation among powerful states, IMF staff and management, and other influential actors is necessary for policy reform. At the same time, he uses constructivist analysis to show that ideational frameworks of what merits appropriate macroeconomic policy response also have an impact on reform efforts, and that IMF management and staff seek legitimacy in their policy choices. In response to the crises in 1999 and 2008, the author maintains, poverty and inequality now 'matter' in IMF thinking and serve as an opportunity for policy insiders and external actors to deepen the institution's new commitment to 'inclusive' growth. Finally, Hibben draws on neo-Gramscian analysis to highlight how the IMF looked to soften the destabilizing effects of globalization through reforms focused on stakeholder participation in poor states and will continue to do so in its support of the new United Nation Sustainable Development Goals. This means that the 2015-2030 time period will be a critical juncture for IMF LIDC reform. By drawing from diverse theoretical traditions, the author thus provides a unique framework for the study of contemporary IMF change and how best those interested in LIDC policy reform can meet this objective.

Table of Contents

Frontmatter
Chapter 1. The IMF, LIDC Reform, and the Post-Washington Consensus
Abstract
‘Poor States, Power, and the Politics of IMF Reform: Drivers of Change in the Post-Washington Consensus’ by Mark Hibben addresses a critical gap in the International Monetary Fund (IMF) literature. Chapter 1 highlights that despite the growing policy footprint of the IMF in the world’s poorest states, the literature has not elucidated what factors drive successful cases of IMF Low Income Developing Country (LIDC) reform in the post-Washington Consensus period. The chapter provides a brief overview of LIDCs and develops why the post-2008 period is crucial for policy insiders and activists interested in macroeconomic and development outcomes in the global South. The chapter then introduces the four cases studied and the book’s research design. It concludes with a summary of major findings.
Mark Hibben
Chapter 2. The IMF and LIDCs
Abstract
Effective analysis of post-Washington Consensus IMF LIDC policy reform requires institutional literacy in three areas: the IMF’s formal operations; the informal dynamics of its operational culture, specifically LIDC staff; and the historical role of the IMF in LIDCs. This chapter summarizes the Fund’s formal operations and institutional structure with an overview of the IMF and its contemporary role in member surveillance, technical support, and lending. It then focuses on the informal characteristics of the institution’s operational culture. The chapter concludes with an overview of the evolution of the Fund’s relationship with LIDCs from its birth nearly seven decades ago to the end of the Washington Consensus period. Evidence from the chapter demonstrates that the IMF wields both direct and indirect forms of power in its relationship with LIDCs.
Mark Hibben
Chapter 3. Theorizing Post-Washington Consensus LIDC Reform
Abstract
This chapter first formally reviews IMF literature and summarizes the variables that it has identified as influencing contemporary IMF policy choices. Chapter 3 then develops how three theoretical frameworks explain IMF LIDC change. Rationalist inspired approaches draw from PA modeling and focus primarily on how the dynamics that exist between powerful states and the IMF management and staff produce conditions within the institution that facilitate or undermine policy reform. Constructivist approaches focus on how changing economic ideas, notions of legitimacy, and shifting development norms influence policy choices in the IMF. Historical structural approaches drawing from Gramscian theory conceptualize IMF LIDC reform as being interrelated with global structural changes and crisis points in the contemporary globalizing social order.
Mark Hibben
Chapter 4. The HIPC and HIPC II Initiatives
Abstract
This chapter first traces how the breakdown of the Bretton Woods hegemony and the IMF’s response to the Mexican debt crisis of 1982 set the stage for the 1996 HIPC and 1999 HIPC II reforms. The chapter then examines the dynamics within the IMF that led to the HIPC and HIPC II between 1995 and 1999. In the HIPC case, a division of preferences concerning limited IMF debt forgiveness between two blocs of powerful states reinforced the leverage of the managing director and IMF staff at two junctures resistant to reform. In contrast, the HIPC II case saw broad-based support for reform. Both cases highlight the importance of NGOs and the managing director in enacting LIDC reform and how shifting dynamics in the global economy impact IMF policy choices and change.
Mark Hibben
Chapter 5. ‘Pro-Poor’ Concessionary Lending: The PRGF
Abstract
The formal adoption of the PRGF in 1999 committed the IMF to a ‘pro-poor’ model of concessionary lending. This chapter first explores how the broad-based conservative shift in economic thinking in the 1980s manifested itself within the IMF, particularly around how Fund staff framed the need to aggressively eliminate ‘market distortive’ laws and institutional structures in LIDCs. The chapter then examines how IMF management and staff initially dismissed growing critiques of its LIDC policy in the late 1980s and early 1990s. Growing popular resistance from the mid-1990s to 1999 to the IMF and other liberalizing multilateral initiatives, combined with the fallout from the Asian crisis, provided an opening within the Fund to question the effectiveness of the Washington Consensus model. The chapter then traces the micro-dynamics, from 1997 to 1999, within the IMF that led to the PRGF.
Mark Hibben
Chapter 6. Deepening the IMF’s Development Model: The ECF, RCF, and SCF Reform
Abstract
The most recent IMF LIDC reform is tied to the fallout from the 2008 global financial crisis. This chapter first traces how the crisis delegitimized a conservative macroeconomic framework deeply embedded in IMF ‘common sense’. The chapter also uncovers evidence that global elites see the IMF and other multilateral institutions as important vectors to rebuild and maintain broad-based support of globalizing capitalism. This is expressed partially in how the IMF now interfaces with LIDC stakeholders. The chapter also shows that the 2010 reform is tied to the growing strength of a ‘developmentalist’ bloc within the IMF. The 2008 crisis strengthened the hand of the managing director, UK, and France relative to that of the USA and those who advocate for less involvement in development issues.
Mark Hibben
Chapter 7. Conclusion
Abstract
The concluding chapter summarizes results, offers a critique of the research design used, and discusses the next stage of IMF LIDC reform. Two tiers of actors—primary and secondary—influence LIDC outcomes. A coalition between two primary actors (MD-staff, MD-powerful states, powerful states-staff), or a primary actor and a secondary actor (LIDCs, NGOs, the US Congress, and the World Bank president), appears necessary to produce significant policy change. As predicted by PA models, a lack of consensus among powerful state principals provided openings for management and staff to initiate or resist policy reform. The managing director also is a key player who drives LIDC policy agendas and reform. As seen in the fallout following the Asian crisis and the global financial crisis, systemic crises play a central role in changing ideas around what is deemed legitimate in IMF policy choices and helping drive policy reform.
Mark Hibben
Backmatter
Metadata
Title
Poor States, Power and the Politics of IMF Reform
Author
Mark Hibben
Copyright Year
2016
Electronic ISBN
978-1-137-57750-4
Print ISBN
978-1-137-57749-8
DOI
https://doi.org/10.1057/978-1-137-57750-4