The International Monetary Fund and the Global Spread of Privatization

By N. Brune, G. Garrett, Bruce Kogut. International Monetary Fund Staff Papers, 2003

146 citations recorded by the source corpus.

Well over a trillion dollars worth of state-owned firms have been privatized since 1980. The traditional argument is that governments choose to privatize in response to fiscal pressures. In this study, the authors examine the impact of lFI conditionality on privatization andfind that IMF conditionality, in particular, has an important indirect economic benefit. Investors are willing to pay more for privatized assets in countries that owe the IMF money (and hence that are subject to the policy constraints attached to the loans). The reason for this is that investors view IMF conditionality as a signal of credible policy reform. The magnitude of this effect is striking. For every dollar a developing country owed the IMF in the early 1980s, it subsequently privatized state-owned assets worth roughly 50c. Admittedly, this "credibility bonus" of IMF lending may not justify the policy conditions typically imposed by the IMF. However, the additional capital drawn into developing countries as a result of the IMF-privatization nexus is no doubt helpful to these economies.

Subfields: Development, Finance, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/a1c45182c4d632fe89fd72fd6d1eda3ae0e0b548

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Citations in the corpus

The Construction of a Global Profession: The Transnationalization of Economics1 (2006, background): “37 Likewise, there is substantial evidence that countries that owe the IMF money (and are thus constrained by IMF conditionality in their policy options) receive a “credibility bonus” from foreign investors (Brune et al. 2004).”
IMF program compliance: Aggregate index versus policy specific research strategies (2006, background): “exist, however. On privatization under IMF programs, see Brune, Garrett, and Kogut (2004) .”
Taking ‘Galton's Problem’ Seriously (2006, background): “Brune, Nancy, GeoffreyGarrett and Bruce Kogut (2004) ‘The InternationalMonetary Fund and the Global Spread of Privatization’, IMF Staff Papers 51(2): 195–219.”
The International Monetary Fund: A review of the recent evidence (2008, background): “Seven of nine studies find this relationship, at varying levels of statistical significance, with one significant finding pointing in the opposite direction (Brune et al. 2004).”
IMF conditionality and development policy space, 1985–2014 (2016, background): “On the other hand, it may also be the case that after decades of countries corporatizing, privatizing or liquidating publicly-owned firms at the behest of the IMF (Brune, Garrett, and Kogut 2004), there is less room for further such reforms.”
The Global Diffusion of Public Policies: Social Construction, Coercion, Competition or Learning? (2007, background): “Welfare reform and the race to the bottom: theory and evidence.”
The Washington Consensus as transnational policy paradigm: Its origins, trajectory and likely successor (2013, background): “The IMF became particularly famous for playing this role and was even described as the leader of a global ‘creditors’ cartel’ (Cline, 1995 : 205–8; Bird, 2001 : 1857; Brune, Garrett and Kogut, 2004 ; Buira, 2003 ; Weisbrot, 2007 ).”
Trade-based Diffusion of Labor Rights: A Panel Study, 1986–2002 (2009, background): “doi:10.1017/S0003055409990116”
The Sociology of Finance (2011, background): “The neoliberal orthodoxy embraced by the International Monetary Fund (IMF) and World Bank favored the removal of capital controls, central bank independence, privatization, and financial deregulation (Babb 2009, p. 70; Brune et al. 2004; Polillo & Guillén 2005).”