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Understanding Pathways Through Financial Crises and the Impact of the IMF: An Introduction

Understanding Pathways Through Financial Crises and the Impact of the IMF: An Introduction Global Governance 12 (2006), 373– 393 Understanding Pathways Through Financial Crises and the Impact of the IMF: An Introduction Ngaire Woods The International Monetary Fund is often perceived as imposing harsh policies on countries facing financial crisis. A comparison of six countries affected by the pressures of the 1990s suggests more subtle effects. In Malaysia, India, and South Africa, policymakers kept the IMF at arms length to permit a more gradual and heterodox adjustment, including cap- ital controls in India and Malaysia. By contrast, Argentina, Turkey, and Indonesia were bound tightly into the embrace of the IMF. However, this did not push policymakers to take tough decisions. Rather, IMF loans to Argentina and Turkey permitted policymakers to postpone difficult choices as both they and the IMF sought to protect previous policies and loans. In Indonesia, by contrast, borrowing from the IMF opened up a conduit for KEYWORDS: larger political pressures that brought down the Suharto regime. International Monetary Fund, financial crisis, conditionality, capital mar- kets, policy space, emerging economies. n 1997, a crash in the Thai baht triggered a financial crisis that rapidly spread across East Asia and beyond. Many countries were affected by the crisis—some immediately, others less http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Global Governance: A Review of Multilateralism and International Organizations Brill

Understanding Pathways Through Financial Crises and the Impact of the IMF: An Introduction

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Publisher
Brill
Copyright
Copyright © Koninklijke Brill NV, Leiden, The Netherlands
ISSN
1075-2846
eISSN
1942-6720
DOI
10.1163/19426720-01204004
Publisher site
See Article on Publisher Site

Abstract

Global Governance 12 (2006), 373– 393 Understanding Pathways Through Financial Crises and the Impact of the IMF: An Introduction Ngaire Woods The International Monetary Fund is often perceived as imposing harsh policies on countries facing financial crisis. A comparison of six countries affected by the pressures of the 1990s suggests more subtle effects. In Malaysia, India, and South Africa, policymakers kept the IMF at arms length to permit a more gradual and heterodox adjustment, including cap- ital controls in India and Malaysia. By contrast, Argentina, Turkey, and Indonesia were bound tightly into the embrace of the IMF. However, this did not push policymakers to take tough decisions. Rather, IMF loans to Argentina and Turkey permitted policymakers to postpone difficult choices as both they and the IMF sought to protect previous policies and loans. In Indonesia, by contrast, borrowing from the IMF opened up a conduit for KEYWORDS: larger political pressures that brought down the Suharto regime. International Monetary Fund, financial crisis, conditionality, capital mar- kets, policy space, emerging economies. n 1997, a crash in the Thai baht triggered a financial crisis that rapidly spread across East Asia and beyond. Many countries were affected by the crisis—some immediately, others less

Journal

Global Governance: A Review of Multilateralism and International OrganizationsBrill

Published: Aug 3, 2006

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