The Review of International Organizations

, Volume 12, Issue 4, pp 523–558 | Cite as

Are IMF lending programs good or bad for democracy?

  • Stephen C. NelsonEmail author
  • Geoffrey P. R. Wallace


Have IMF lending programs undermined political democracy in borrowing countries? Building on the extensive literature on conditional lending, we outline several pathways through which IMF program participation might affect the levels of democracy in borrowing countries - including a new variant that suggests the possibility of a positive association between lending program participation and democracy scores. In order to test the argument we assemble annual data from 120 low- and middle-income countries observed (at maximum) in each year between 1971 and 2007. We use three strategies - genetic matching, instrumental variables, and difference-in-differences estimation - to better estimate the direction and size of the statistical association between participation in IMF lending programs and the level of democracy. We find evidence for modest but definitively positive conditional differences in the democracy scores of participating and non-participating countries.


International organizations International Monetary Fund Conditional Lending Democracy 



For helpful comments on previous versions of this paper we thank Rod Abouharb, Leonardo Baccini, Henry Bienen, Jordan Gans-Morse, Katharina Michaelowa, Sophia Jordán Wallace, and participants at the Political Economy of International Organizations conference at Villanova University. We also thank the anonymous reviewers and the editor for their close reading and incisive criticism. Dong Zhang provided helpful research assistance. The aforementioned are absolved of responsibility for any remaining errors, which are our own.

Ethical statement

The authors declare that they have read and understand the Ethical Rules applicable to the Review of International Organizations and that this manuscript submission complies with the aforementioned Ethical Rules.

Conflict of interest

The authors declare they have no conflict of interest.

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© Springer Science+Business Media New York 2016

Authors and Affiliations

  1. 1.Department of Political ScienceNorthwestern UniversityEvanstonUSA
  2. 2.Department of Political ScienceRutgers UniversityNew BrunswickUSA

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