Conditionality and Ownership in IMF Lending: A Political Economy Approach

By Allan Drazen. International Monetary Fund Staff Papers, 2002

258 citations recorded by the source corpus.

The relation between IMF conditionality and country ownership of assistance programs is considered from a political economy perspective, focusing on the question of why conditionality is needed if it is in a country's best interests to undertake the reform program. It is argued that heterogeneity of interests must form the basis of any discussion of conditionality and ownership. The paper stresses a conflict between a reformist government and domestic interest groups that oppose reform, leading to a distinction between government and country ownership of a program. After discussing conceptual issues, I present a model of lending and policy reform that illustrates the effects of unconditional and conditional assistance first without and then with political constraints. It is shown that conditionality can play a key role even when the IMF and authorities agree on the goals of an assistance program.

Subfields: Development, Economics and Econometrics, Political Science and International Relations

View Paper: https://www.semanticscholar.org/paper/1510002a3b528b9f39b60674f6b27058d8cd9455

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Citations in the corpus

The Scope of IMF Conditionality (2008, background): “…with lower GDP growth rates, Przeworski and Vreeland 2000 inferred that lending is conditioned on inappropriate policy measures+ 36+ Khan and Sharma 2001; and Drazen 2002 call for greater ownership; IMF 2005 introduced the initiative to streamline conditionality+ Even studies showing beneficial…”
WHICH VARIABLES EXPLAIN DECISIONS ON IMF CREDIT? AN EXTREME BOUNDS ANALYSIS (2005, unknown): “The results for this variable vary from negative [Dreher and Vaubel (2004)], no effect [e.”
International Negotiations and Domestic Politics: The Case of IMF Labor Market Conditionality (2012, background): “…the IMF+ Putnam 1988 also argues that an IMF program can tip the balance in favor of economic reform+ 36+ Vreeland 2003, 63– 64+ 37+ IMF 2001+ 38+ See Drazen 2002; Boughton and Mourmouras 2004; and Ivanova et al+ 2006+ 39+ IMF 2001+ These considerations lead to the following hypotheses:”
The Global Diffusion of Public Policies: Social Construction, Coercion, Competition or Learning? (2007, background): “Drazen (2002) argues that when a government faces political opposition to policies that are in the nation’s ultimate self-interest, it may be happy to have those policies imposed by outsiders.”
Famine in North Korea : markets, aid, and reform (2007, background): “Drazen (2002) provides a theoretical model of this interaction, which centers on the concept of “ownership.””
External conditionality and the debt crisis: the ‘Troika’ and public administration reform in Greece (2015, background): “As in other, international cases of external intervention, the sense of ‘ownership’ has been a key, intervening variable determining outcomes (Drazen 2002; Haughton 2007).”