Power Relationships in the International Monetary Fund: The Consequences of Quota Changes

The Second Amendment to the Articles of Agreement of the International Monetary Fund became effective April 1, 1978. Using some simple game theoretical tools, an attempt is made to show that in many cases the framers of these amendments and quota changes have achieved a result that may be exactly opposite to their intentions.The quantitative analysis of a voting system provides a singular perspective from which to view the power relationships in an institution. The analysis of power relationships as reflected in power indices, although admittedly limited in scope, appears to be demonstrably superior to contemplation of voting shares. The results raise a fundamental question about the desirability of using quotas as an appropriate basis for determining member countries' influence or power in the Fund.