Theory, Evidence, and Reform

In this book, I demonstrated that the G5 have a central role in IMF policy-making. Furthermore, I argued that their preferences over IMF policies are predicated on the economic exposure of their domestic banks and exporters, which sometimes lobby them for protection following an economic shock in a developing or emerging market. As a result, changing economic linkages determine government preferences in the IMF’s large shareholders which, in turn, affects IMF policy outcomes. This is all possible because the IMF’s large shareholders have a much stronger grip on policy-making than is commonly recognized. While on the surface it appears that governments have a symbolic role only in IMF policy-making, a more detailed analysis of how the organization sets policies and makes decisions revealed that they have both the means and motivation to change the nature of program approval, lending, and conditionality.