The Impact of IMF Programs on Populism

• In Event: New Research on IMF Programs: Design, Implementation, and Impact

Abstract

With the continuing rise of populist leaders around the world, recent scholarly work has increasingly focused on the determinants and consequences of populism. One question that has received relatively less attention is the role of international organizations (IOs) and their policies in contributing to the rise of populist sentiments and movements. Surprisingly, despite its intrusiveness and critical distributional effects, the literature has not systematically explored the link between IMF conditionality and the rise of populism. In this paper, we argue that IMF programs and conditionality in programs can further contribute to the conditions ripe for support for populist agendas. Specifically, perceived incompetence of the government, violation of sovereignty, and stringency & variation in conditionality might push the electorate to search for alternative political appeal, especially at the extremes. We test this theory in a global sample of IMF-borrowers in a novel dataset using synthetic control method, which helps us overcome the problem of non-random selection into IMF programs and the small sample size, where populists have gained substantial support. Using this method, we find evidence that participation in IMF programs drives public to the extremes, increasing the appeal of and support for populist parties. This paper not only contributes to the understanding of IO’s impact on populism but also questions their role and effectiveness in an increasingly anti-global environment.

Authors

• Merih Angin, Koç University

• Saliha Metinsoy, University of Groningen