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The West’s Teeth: IMF conditionality during the Cold War

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  • Ariel Akerman
  • João Paulo Pessoa
  • Leonardo Weller

Abstract

Did the International Monetary Fund (IMF) play a role in the United States and its Western allies efforts to contain the advance of communism during the Cold War? To answer this question, we construct a new database containing the number of conditions applied to over 500 IMF loans since 1970 and analyse how the distance from a borrowing country to its closet communist neighbour affected the IMF conditionality. We show that the Fund imposed fewer conditions on loans to countries geographically closer to the communist bloc. Results are stronger when neighbouring communist countries were not part of the Warsaw Pact. This pattern persisted during the 1990s, when the Fund helped former communist countries in their transition to market economies. However, we find no strong evidence of such discretionary treatment by the IMF after 2001, when the containment of communism had ceased to be the West's top priority.

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  • Ariel Akerman & João Paulo Pessoa & Leonardo Weller, 2022. "The West’s Teeth: IMF conditionality during the Cold War," The World Economy, Wiley Blackwell, vol. 45(7), pages 2034-2051, July.
    • Handle: RePEc:bla:worlde:v:45:y:2022:i:7:p:2034-2051
    DOI: 10.1111/twec.13264
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