Working Paper: NBER ID: w12667
Authors: Shangjin Wei; Zhiwei Zhang
Abstract: Trade reform conditions are common in IMF supported programs. Of the 99 countries that had IMF programs during 1993-2003, 77 had conditions on trade reforms in their programs. Since the WTO has not been found especially effective in promoting trade openness for most developing countries, it is of great interest to see if the IMF has been more effective as it combines carrots and sticks not available to the WTO. Yet, the effectiveness of trade conditions in IMF programs has not been systematically studied. Using a unique dataset, this paper provides such an assessment. It finds that trade conditions are associated with an increase in trade openness on average, but the effect comes mostly from countries that, by some measure, have a high degree of "willingness to reform."
Keywords: trade reform; IMF; developing countries; trade openness; conditionality
JEL Codes: F10; F13; F33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trade conditions (F19) | trade openness (F43) |
| trade conditions (F19) | import volume (A30) |
| willingness to reform (P41) | trade openness (F43) |
| willingness to reform (P41) | import volume (A30) |
| political willingness (D72) | trade volume (F10) |
| trade conditions (F19) | real reforms (E69) |