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The World System & the Hollowing-out of State Capacity: How Structural Adjustment Programs Impact Bureaucratic Quality in Developing Countries

Bernhard Reinsberg, Alexander Kentikelenis, Thomas Stubbs, Lawrence King and Centre for Business Research

Working Papers from Centre for Business Research, University of Cambridge

Abstract: The administrative ability of the state to deliver effective policy is essential for economic development. While sociologists have long devoted attention to domestic forces underpinning state capacity, we focus on world system pressures from Western-dominated international organisations. Scrutinising policy reforms mandated by the International Monetary Fund (IMF), we argue that 'structural conditions' exert deleterious effects on bureaucratic quality by increasing the risk of bureaucrats falling prey to special interests and narrowing potential policy instruments available to them. We test these arguments using a new dataset on IMF conditionality from 1985-2014. Our analysis shows that structural conditions – especially conditions on privatisation, price deregulation, and public-sector employment – reduce bureaucratic quality. Using instrumentation techniques, we also discount the possibility that the relationship is driven by the IMF imposing structural conditions precisely in countries with low bureaucratic quality. A careful reconsideration of IMF policy reforms is therefore required to avoid undermining local institutions.

Keywords: World systems; globalization; International Monetary Fund; structural adjustment; state capacity; bureaucratic quality (search for similar items in EconPapers)
JEL-codes: F33 F34 F53 (search for similar items in EconPapers)
Date: 2018-03
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