Are IMF lending programs good or bad for democracy?

Article

Abstract

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.

Keywords

International organizations International Monetary Fund Conditional Lending Democracy 

Supplementary material

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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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