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Economic Liberalization via IMF Structural Adjustment: Sowing the Seeds of Civil War?

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  • Hartzell, Caroline A.
  • Hoddie, Matthew
  • Bauer, Molly

Abstract

Previous studies that have explored the effects of economic liberalization on civil war have employed aggregate measures of openness and have failed to account for potential endogeneity bias. In this research note, we suggest two improvements to the study of the relationship between liberalization and civil war. First, emphasizing that it is processes that systematically create new economic winners and losers rather than particular levels of economic openness that have the potential to generate conflict, we consider the effects of one oft-used means of liberalizing economies: the adoption by countries of International Monetary Fund (IMF) structural adjustment programs. Second, we use a bivariate probit model to address issues of endogeneity bias. Analyzing all data available for the period between 1970 and 1999, we identify an association between the adoption of IMF programs and the onset of civil war. This finding suggests that IMF programs to promote economic openness unintentionally may be creating an environment conducive to domestic conflict.

Suggested Citation

  • Hartzell, Caroline A. & Hoddie, Matthew & Bauer, Molly, 2010. "Economic Liberalization via IMF Structural Adjustment: Sowing the Seeds of Civil War?," International Organization, Cambridge University Press, vol. 64(2), pages 339-356, April.
    • Handle: RePEc:cup:intorg:v:64:y:2010:i:02:p:339-356_00
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    Cited by:

    1. Toke S. Aidt & Facundo Albornoz & Esther Hauk, 2019. "Foreign in influence and domestic policy: A survey," Cambridge Working Papers in Economics 1928, Faculty of Economics, University of Cambridge.
    2. repec:gig:joupla:v:4:y:2012:i:3:p:3-37 is not listed on IDEAS
    3. Psofogiorgos, Nikolaos - Alexandros & Metaxas, Theodore, 2017. "IMF, Democracy and Economic Development: Review and Critique," MPRA Paper 79403, University Library of Munich, Germany.
    4. Bernhard Reinsberg & Daniel O Shaw & Louis Bujnoch, 2024. "Revisiting the security–development nexus: Human security and the effects of IMF adjustment programmes," Conflict Management and Peace Science, Peace Science Society (International), vol. 41(1), pages 72-95, January.
    5. Krishna Chaitanya Vadlamannati & Samuel Brazys, 2023. "Does cultural diversity hinder the implementation of IMF-supported programs? An empirical investigation," The Review of International Organizations, Springer, vol. 18(1), pages 87-116, January.
    6. Trude Midtgaard & Krishna Vadlamannati & Indra Soysa, 2014. "Does the IMF cause civil war? A comment," The Review of International Organizations, Springer, vol. 9(1), pages 107-124, March.
    7. Toke S. Aidt & Facundo Albornoz & Esther Hauk, 2021. "Foreign Influence and Domestic Policy," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 426-487, June.
    8. Thomas Stubbs & Bernhard Reinsberg & Alexander Kentikelenis & Lawrence King, 2020. "How to evaluate the effects of IMF conditionality," The Review of International Organizations, Springer, vol. 15(1), pages 29-73, January.
    9. Gehring, Kai & Lang, Valentin, 2020. "Stigma or cushion? IMF programs and sovereign creditworthiness," Journal of Development Economics, Elsevier, vol. 146(C).
    10. Bomprezzi, Pietro & Marchesi, Silvia, 2023. "A firm level approach on the effects of IMF programs," Journal of International Money and Finance, Elsevier, vol. 132(C).
    11. Michael Breen & Robert Gillanders, 2015. "Political Trust, Corruption, and Ratings of the IMF and the World Bank," International Interactions, Taylor & Francis Journals, vol. 41(2), pages 337-364, March.
    12. James Boyce & Shepard Forman, 2010. "Financing Peace: International and National Resources for Postconflict Countries and Fragile States," Working Papers wp238, Political Economy Research Institute, University of Massachusetts at Amherst.
    13. Ali Burak Güven, 2012. "The IMF, the World Bank, and the Global Economic Crisis: Exploring Paradigm Continuity," Development and Change, International Institute of Social Studies, vol. 43(4), pages 869-898, July.
    14. Nikolaos Alexandros Psofogiorgos & Theodore Metaxas, 2017. "IMF, Democracy and Economic Development," Bulletin of Political Economy, Bulletin of Political Economy, vol. 11(1), pages 21-44, June.
    15. Ifrah Siddique & Muhammad Azmat Hayat & Muhammad Zahid Naeem & Abdullah Ejaz & Cristi Spulbar & Ramona Birau & Toni Calugaru, 2021. "Why Do Countries Request Assistance from International Monetary Fund? An Empirical Analysis," JRFM, MDPI, vol. 14(3), pages 1-19, March.
    16. Chletsos, Michael & Sintos, Andreas, 2021. "Hide and seek: IMF intervention and the shadow economy," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 292-319.
    17. Stephen C. Nelson & Geoffrey P. R. Wallace, 2017. "Are IMF lending programs good or bad for democracy?," The Review of International Organizations, Springer, vol. 12(4), pages 523-558, December.
    18. Valentin Lang, 2021. "The economics of the democratic deficit: The effect of IMF programs on inequality," The Review of International Organizations, Springer, vol. 16(3), pages 599-623, July.
    19. Lang, Valentin, 2016. "The Economics of the Democratic Deficit: The Effect of IMF Programs on Inequality," Working Papers 0617, University of Heidelberg, Department of Economics.
    20. Brett A. Casper, 2017. "IMF Programs and the Risk of a Coup d’état," Journal of Conflict Resolution, Peace Science Society (International), vol. 61(5), pages 964-996, May.
    21. Ben Zissimos & Caleb Stroup, 2013. "Social Unrest in the Wake of IMF Structural Adjustment Programs," Working Papers 13-04, Davidson College, Department of Economics.
    22. Kai Gehring & Valentin F. Lang, 2018. "Stigma or Cushion? IMF Programs and Sovereign Creditworthiness," CESifo Working Paper Series 7339, CESifo.
    23. Süveyda Karakaya, 2018. "Globalization and contentious politics: A comparative analysis of nonviolent and violent campaigns," Conflict Management and Peace Science, Peace Science Society (International), vol. 35(4), pages 315-335, July.

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