Citizens living in liberal democracies are far more likely to oppose economic liberalisation policies attached to IMF (International Monetary Fund) loans, while those in autocratic states tend to welcome them and embrace their reforms, finds new UCL research.
IMF finance often comes with conditions requiring recipient countries to adopt more free market-oriented policies, but the study reveals that public reaction to these reforms diverge sharply, depending on whether a country is democratic or autocratic.
Published in Socio-Economic Review, the research highlights the fluctuating gap between the economic policies citizens want and those they receive with IMF assistance.
The IMF is an organisation of 191 member countries that provides policy advice, capacity development and financial assistance to its members with the aim of achieving sustainable growth and prosperity.
Drawing on data from 75 countries (between 1990 and 2016), researchers from UCL, University of Glasgow, and Binghamton University, measured the gap between public preferences (as per the World Values Survey) and their country’s economic policy (measured by the Fraser Institute’s Economic Freedom Index).
In democracies, the data shows citizens prefer greater protection from market forces than what is promoted by the IMF, widening the gap between the desired and the delivered policies. This helps to explain public backlash, including citizens’ protests in Greece and Kenya, in response to IMF reform packages.
By contrast, in autocracies, IMF lending tends to narrow the gap between what the public and what the government delivers. Citizens of autocracies tend to desire greater economic freedom and market liberalisation than what their government allows. In autocratic states like Zimbabwe and Venezuela, surveys show a desire for greater economic liberalisation and more in line with what the IMF prescribes.
Lead author, Dr Rod Abouharb (UCL Political Science) said: "The results show that citizens of democracies prefer more protection from market forces than promoted by the IMF. By imposing policies that don’t have public support, our analysis suggests that IMF policies may undermine economic democracy in democratic societies.
"In contrast, in autocracies, IMF policies shift economic policy closer to citizens’ preferences.
"This divergence between regime types is down to two main factors. First, autocracies start with lower levels of economic liberalism, leaving greater room for change without surpassing citizen’s tolerance. Second, autocracies are less responsive to popular opposition when they do exceed those preferences."
He added: "We believe the IMF can play a Good Samaritan role by helping governments implement economic policies their citizens already support, particularly in autocracies, a role which has been historically overlooked."
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Read The role of IMF programs in aligning national economic policy with domestic preferences
Sophie Hunter
E: sophie.hunter@ucl.ac.uk
