Structural adjustment is commonly prescribed as a condition for receiving loans from the World Bank and the International Monetary Fund, but the effects of structural adjustment and conditionality are controversial. While much research has been devoted to examining the economic effects of conditional lending, far fewer studies have looked at the political consequences. How do conditional lending agreements affect democracy? Does the number of required reforms or the type of reform play a role? Neoliberal theory suggests that improved economic conditions will result from structural adjustment, and over time this should lead to higher levels of democracy. Conversely, democratic practices may decline in the presence of conditionality as the government reduces civil liberties in an attempt to quell the social unrest that results from structural adjustment. Using a sample of Latin American countries from 1998 to 2003, this article analyzes the effects of both the number and type of required conditions on democracy and finds that while the presence of an IMF loan itself does not affect democracy, loan with a high number of required reforms have a deleterious effect on democratic practices. Further, these effects are conditional upon the type of reform required in the loan. This suggests that IMF efforts to consider the political consequences of reforms when negotiating loans have not been entirely successful and that the number and type of conditional requirements should be carefully considered before their inclusion in a loan agreement.
Abouharb, R. and Cingranelli, D. ( 2006). "The Human Rights Effects of World Bank Structural Adjustment, 1981-2000," International Studies Quarterly50(2): 233-62.
2.
Abouharb, R. and Cingranelli, D. ( 2007). Human Rights and Structural Adjustment. Cambridge: Cambridge University Press .
3.
Alexander, N. ( 2006). "Decentralization and Sovereignty: How Policy Space Is Eroded," Social Watch Report 2006. Uruguay: The Third World Institute.
4.
Arellano, M. and Bond, S. ( 1991). "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies58(2): 277-97.
5.
Barro, R. and Lee, J. ( 2005). "IMF Programs: Who Is Chosen and What Are the Effects ?" Journal of Monetary Economics52(7): 1245-69.
6.
Beck, N. and Katz, J. ( 1995). "What to Do (and Not to Do) with Time-Series Cross-Section Data," American Political Science Review89(3): 634-47.
7.
Beck, N. and Katz, J. ( 2004). "Time Series Cross-Section Issues: Dynamics 2004." Annual Meeting of the Society for Political Methodology. Stanford University, CA.
8.
Bird, G. ( 1998). "The Effectiveness of Conditionality and the Political Economy of Policy Reform: Is It Simply a Matter of Political Will?" Journal of Policy Reform1(1): 89-113.
9.
Bird, G. ( 2001). "IMF Programs: Do They Work? Can They be Made to Work Better?" World Development29(11): 1849-1965.
10.
Blundell, R. and Bond, S. ( 1998). "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Journal of Econometrics87(1): 115-43.
11.
Boron, Atilio ( 1998). "Faulty Democracies? A Reflection of the Capitalist Fault Lines in Latin America," in F. Aguero and J. Stark (eds), Fault Lines of Democracy in Post Transition Latin America. Miami, FL: North-South Center Press.
12.
Brune, N., Garrett, G., and Kogut, B. ( 2004). "The International Monetary Fund and the Global Spread of Privatization," IMF Staff Papers51(2): 195-219.
13.
Calvo, G. and Vegh, C. ( 1999). "Inflation Stabilization and BOP Crises in Developing Countries," in J. Taylor and M. Woodford (eds), Handbook of Macroeconomics . New York: North-Holland.
14.
Crisp, B. and Kelly, M. ( 1999). "The Socioeconomic Impacts of Structural Adjustment ," International Studies Quarterly43(3): 533-52.
15.
Di John, J. ( 2005). "Economic Liberalization, Political Instability, and State Capacity in Venezuela," International Political Science Review26(1): 107-24.
16.
Dollar, D. and Svensson, J. ( 2000). "What Explains the Success or Failure of Structural Adjustment Programmes?" Economic Journal110 (October): 894-917.
17.
Drazen, A. ( 2002). "Conditionality and Ownership in IMF Lending: A Political Economy Approach," IMF Staff Papers49(1): 36-67.
18.
Dreher, A. ( 2003). "The Influence of Elections on IMF Program Interruptions ," Journal of Development Studies39(6): 101-20.
19.
Dreher, A. ( 2006). "IMF and Economic Growth: The Effects of Programs, Loans, and Compliance with Conditionality," World Development34(5): 768-88.
20.
Ethier, D. ( 2003). "Is Democracy Promotion Effective? Comparing Conditionality and Incentives," Democratization10(1): 99-120.
21.
Fein, H. ( 1995). "More Murder in the Middle: Life Integrity Violations and Democracy in the World," Human Rights Quarterly17: 170-91.
22.
Fisher, S. ( 1999). "On the Need for a Lender of Last Resort," Journal of Economic Perspectives13(4): 85-104.
23.
Freedom House (2006). "Freedom in the World: Political Rights and Civil Liberties," New York. URL: www.freedomhouse.org .
24.
Friedman, T. ( 2000). The Lexus and the Olive Tree: Understanding Globalization . New York: Random House.
25.
Garuda, G. ( 2000). "The Distributional Effects of IMF Programs: A Cross Country Analysis," World Development28(6): 1031-51.
26.
Goldstein, Morris ( 2003). "IMF Structural Programs," in M. Feldstein (ed.), Economic and Financial Crises in Emerging Market Economies. Chicago: University of Chicago Press.
27.
Graham, C. and Pettinato, S. ( 2003). "Hardship and Happiness: Social Mobility and Public Perceptions during Market Reforms," in C. Wise and R. Roett (eds), Post-Stabilization Politics in Latin America: Competition, Transition, Collapse . Washington, DC: Brookings Institution Press.
28.
Haggard, S. ( 1985). "The Politics of Adjustment: Lessons from the IMF’s Extended Fund Facility," International Organization39(3): 505-34.
29.
Haggard, S. ( 2000). The Political Economy of the Asian Financial Crisis . Washington, DC: Institute for International Economics .
30.
Harrigan, J. and Mosley, P. ( 1991). "Assessing the Impact of World Bank Structural Development Lending 1980-1987," Journal of Development Studies27(3): 63-94.
31.
Huntington, S.P. ( 1992). The Third Wave. Norman: University of Oklahoma Press.
32.
Hutchison, M. and Noy, I. ( 2003). "Macroeconomic Effects of IMF-sponsored Programs in Latin America: Output Costs, Program Recidivism and the Vicious Cycle of Failed Stabilizations," Journal of International Money and Finance22(7): 991-1014.
33.
Im, K., Pesaran, M., and Shin, Y. ( 2003). "Testing for Unit Roots in Heterogeneous Panels ," Journal of Econometrics115(1): 53-74.
34.
IMF (2002). "International Monetary Fund Guidelines on Conditionality." URL: www.imf.org/external/np/pdr/cond/2002/eng/guid/092302.htm.
35.
Jensen, N. ( 2004). "Crisis, Conditions, and Capital: The Effect of International Monetary Fund Agreements on Foreign Direct Investment Inflows ," Journal of Conflict Resolution48(2): 194-210.
36.
Joyce, J. ( 2006). "Promises Made, Promises Broken: A Model of IMF Program Implementation," Economics and Politics18(3): 339-63.
37.
Kapur, D. and Naim, M. ( 2005). "The IMF and Democratic Governance," Journal of Democracy16(1): 89-102.
38.
Kaufmann, D. ( 2005). "Human Rights and Governance: The Empirical Challenge ," in P. Alston and M. Robinson (eds), Human Rights and Development: Towards Mutual Reinforcement. Cambridge: Cambridge University Press.
39.
Kaufmann, D., Mastruzzi, M., and Zavaleta, D. ( 2003). "Sustained Macroeconomic Reforms, Tepid Growth: A Governance Puzzle in Bolivia," in D. Rodrik (ed.), In Search of Prosperity. Princeton, NJ: Princeton University Press.
40.
Killick, T. ( 1995). IMF Programs in Developing Countries: Design and Impact . London: Routledge.
41.
Koeberle, S. ( 2005). "Conditionality: Under What Conditions?" in S.H. Koeberle, P. Bedoya , G. Silarszky, and G. Verheyen (eds), Conditionality Revisited . Washington, DC: World Bank.
42.
Kurtz, M.J. ( 2004). "The Dilemma of Democracy in the Open Economy ," World Politics56(2): 262-302.
Levy, J. ( 2005). "The Experience of Brazil," in S.H. Koeberle, P. Bedoya , G. Silarszky, and G. Verheyen (eds), Conditionality Revisited . Washington, DC: World Bank.
45.
Lipset, S.M. ( 1959). "Some Social Requisites of Democracy: Economic Development and Political Legitimacy," American Political Science Review53(1): 69-105.
46.
McLauren, L. ( 1998). "The Effect of IMF Austerity Programs on Human Rights Violations: An Exploratory Analysis of Peru, Argentina, and Brazil." Annual Meeting of theMidwest Political Science Association , Chicago, IL.
47.
Morrissey, O. ( 2005). "Alternatives to Conditionality in Policy-Based Lending ," in S.H. Koeberle, P. Bedoya, G. Silarszky, and G. Verheyen (eds), Conditionality Revisited. Washington, DC: World Bank.
48.
Navia, P. and Velasco, A. ( 2003). "The Politics of Second-Generation Reforms," in P. Kuczynski and J. Williamson (eds), After the Washington Consensus: Restarting Growth and Reform in Latin America. Washington, DC: Institute for International Economics.
49.
Nelson, J. ( 1994). A Precarious Balance: Democracy and Economic Reforms in Latin America. San Francisco, CA: ICS Press.
50.
Nelson, P. ( 2000). "Whose Civil Society? Whose Governance? Decision Making and Practice in the New Agenda at the Inter-American Development Bank and World Bank," Global Governance6(4): 405-31.
51.
Nooruddin, I. and Simmons, J. ( 2006). "The Politics of Hard Choices: IMF Programs and Government Spending," International Organization60(4): 1001-33.
52.
Ocampo, J. ( 2004). "Latin America’s Growth and Equity Frustrations during Structural Reforms," Journal of Economic Perspectives18(2): 67-88.
53.
Oxhorn, P. and Ducatenzeiler, G. ( 1995). "The Problematic Relationship between Economic and Political Liberalization: Some Theoretical Considerations," in P. Oxhorn and P. Starr (eds), Markets and Democracy in Latin America: Conflict or Convergence. Boulder, CO: Lynne Reiner.
54.
Pastor, M. and Wise, C. ( 1999). "The Politics of Second-Generation Reform," Journal of Democracy10(3): 34-48.
55.
Poe, S.C. and Tate, C.N. ( 1994). "Repression of Rights to Personal Integrity in the 1980s: A Global Analysis," American Political Science Review88(4): 853-72.
56.
Przeworski, A., Alvarez, A., Cheibub, J.A., and Limongi, F. ( 2000). Democracy and Development: Political Institutions and Material Well Being in the World, 1950-1990. Cambridge : Cambridge University Press.
57.
Przeworski, A. and Vreeland, J.R. ( 2000). "The Effects of IMF Programs on Economic Growth ," Journal of Development Economics62: 385-421.
58.
Remmer, K. ( 1986). "The Politics of Economic Stabilization: IMF Standby Programs in Latin America, 1954-1984," Comparative Politics19(1): 1-24.
59.
Remmer, K. ( 1995). "New Theoretical Perspectives on Democratization ," Comparative Politics28(1): 103-22.
60.
Rodrik, D. ( 1996). "Understanding Economic Policy Reform," Journal of Economic Literature34(1): 9-41.
61.
Roett, R. ( 2003). "Brazil’s Protracted Transition to Democracy and the Market," in C. Wise and R. Roett (eds), Post-Stabilization Politics in Latin America. Washington, DC: Brookings Institution Press.
62.
Root, H. and Nellis, N. ( 2000). "The Compulsion of Patronage: Political Sources of Information Asymmetry and Risk in Developing Country Economies," in B. De Mesquita and H. Root (eds), Governing for Prosperity. New Haven, CT: Yale University Press.
63.
Rueschmeyer, D., Stephens, E.H., and Stephens, J. ( 1992). Capitalist Development and Democracy. Chicago, IL: University of Chicago Press .
64.
Schultz, Jim and Whitesell, Lily ( 2005). "Deadly Consequences: How the IMF Provoked Bolivia into Bloody Crisis," Multinational Monitor, May/June 2005 (http://www.thirdworldtraveler.com/IMF_WB/IMF_Bolivia_Crisis.html ).
65.
Sehili, S. ( 2005). "Unsuccessful Adjustment Operations: Common Factors and Lessons Learned," in S.H. Koeberle, P. Bedoya, G. Silarszky, and G. Verheyen (eds), Conditionality Revisited. Washington, DC: World Bank.
66.
Sen, A. ( 1999). Development as Freedom. New York: Anchor Books.
67.
Singh, A., Belaisch, A., Collyns, C., De Masi, P., Krieger, R., Meredith, G., and Rennhack, R. ( 2005). Stabilization and Reform in Latin America: A Macroeconomic Perspective on the Experience since the Early 1990s. Washington, DC: IMF.
68.
Stallings, B. and Peres, W. ( 2000). Growth, Employment, and Equity: The Impact of the Economic Reforms in Latin America and the Caribbean. Washington, DC: Brookings Institution Press.
69.
Stiglitz, J.E. ( 2002). Globalization and Its Discontents. New York: W.W. Norton.
70.
Van de Walle, N. ( 1989). "Privatization in Developing Countries: A Review of the Issues," World Development17(5): 601-15.
71.
Vreeland, J. ( 2003). The IMF and Economic Development. Cambridge: Cambridge University Press.
72.
Vreeland, J. ( 2007). The International Monetary Fund: Politics of Conditional Lending. New York: Routledge.
73.
Walton, J. and Shefner, J. ( 1994). "Latin America: Popular Protest and the State ," in D. Seddon and J. Walton (eds), Free Markets and Food Riots . Oxford: Blackwell.
74.
Weyland, K. ( 2002). The Politics of Market Reforms in Fragile Democracies: Argentina, Brazil, Peru, and Venezuela. Princeton, NJ: Princeton University Press.
75.
Williamson, J. ( 1990a). Latin American Adjustment: How Much Has Happened?Washington, DC: Institute for International Economics .
76.
Williamson, J. ( 1990b). "The Debt Crisis at the Turn of the Decade," Institute of Development Studies Bulletin21(2): 4-6.
77.
Williamson, J. ( 2008). "A Short History of the Washington Consensus," in N. Serra and J. Stiglitz (eds), The Washington Consensus Reconsidered . New York: Oxford University Press .
78.
World Bank (2007). World Development Indicators. Washington, DC: World Bank.
