Abstract
The weighted voting system used by the International Monetary Fund creates problems of democratic legitimacy since each member’s influence or voting power is not in general equal to its voting weight. Using voting power analysis to analyse both the Board of Governors and the Executive Board, we show that it tends to enhance the power of the United States at the expense of all other members. We investigate the constituency system as a form of representative democracy, idealizing it as a compound voting body, and find that it gives disproportionately large power to some smaller European countries, particularly Belgium and Netherlands. We also find that many countries are effectively disenfranchised. Separate analyses are done for 2006 and 2012, before and after recent reforms, which have been billed as being radical, enhancing the voice of the poor and emerging markets, but the effects are disappointingly small.
This study updates and modifies “Voting Power in Bretton Woods Institutions” in Power Measures III [Homo Oeconomicus 22(4)], edited by Gianfranco Gambarelli and Manfred J. Holler, Munich: Accedo Verlag, 2005: 605–627.
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Notes
- 1.
One vote for every 100,000 special drawing rights of quota. Each country’s quota is its financial stake in the IMF and theoretically meant to reflect its importance in the world economy.
- 2.
House of Commons Treasury Select Committee, 4th July 2002.
- 3.
No consideration is given here for the members’ preferences, which would determine the likelihood of particular members voting in the same way as each other, which would produce an analysis of empirical voting power. Some coalitions look less likely than others from a game-theoretic point of view. Such an analysis is beyond the scope of the present study (see Leech 2003b).
- 4.
The rules are laid down in Schedule E of the Articles of Association. They state that, in order to be elected, a director must receive at least four percent and no more than nine percent of the eligible votes. If the number of directors elected by this procedure is less than the number required, then there are further ballots with voting eligibility restricted to (1) those members who voted for a candidate who received less than 4 % and (2) those members who voted for a director who was elected but whose votes are deemed to have taken the votes for the director above 9 %.
- 5.
The voting weights as proportions vary slightly between the Board of Governors and Executive Directors because of differences in participation in votes by countries with small weights.
- 6.
This point about the difference between veto power and the power of control was made very clearly by Keynes in opposition to the proposed American veto based on supermajorities in a speech to the House of Lords in 1943 when the Bretton Woods institutions were being planned. See Moggeridge (1980), p. 278; also his Letter to J. Viner, p. 328. Keynes advocated simple majority voting.
- 7.
Quotas change when countries make the payments, which not all have done at the time of writing.
- 8.
These power indices have been calculated using the computer program ipmmle (accessible online at www.warwick.ac.uk/~ecaae, Leech and Leech 2003) which implements the algorithm for computing power indices for voting bodies that are large both in having many members and where the voting weights are large numbers, described in Leech (2003a). For an overview of computing power indices see Leech (2002b) See also Leech (2011) for the properties of power indices when the number of voters in very large.
- 9.
Press Release: “IMF Board Approves Far-Reaching Governance Reforms”, 5 November 2010, IMF Washington.
- 10.
We omit 2008 because the changes were so small.
- 11.
The constituencies are formed endogenously during the voting process: they have no objective status in the rules of the IMF. Members are free to leave and join another constituency by voting for another candidate in the biennial election of the board. Although voting patterns and therefore constituency membership are stable over time, migrations do occur. For example, Kazakhstan and Uzbekistan both changed constituency between 2006 and 2012, the former moving from the Belgian to the Swiss constituency, the latter from the Swiss to the Australasian constituency.
- 12.
Normalised Banzhaf index.
- 13.
Article XII, Sect. 3 (f), and By-Law 17.
- 14.
The absolute (that is, non-normalised) power indices, which are probabilities, are used for this calculation. The normalised indices are then computed.
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Leech, D., Leech, R. (2013). A New Analysis of a Priori Voting Power in the IMF: Recent Quota Reforms Give Little Cause for Celebration. In: Holler, M., Nurmi, H. (eds) Power, Voting, and Voting Power: 30 Years After. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-35929-3_21
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