“IMF’s structural reforms mandating privatisation, price deregulation, and reductions in public sector employment jeopardise state capacity by compromising the healthy relationship between state and business, as in uncertain times bureaucrats are more likely to fall prey to private interests,” says the study carried out by Bocconi University in Italy.
These conditions, Prof. Alexander Kentikelenis, one of the authors of the study, says, “undermine the state capacity to foster sustainable growth and implement policies on health, education and national security”.
The researchers undertook a study to ascertain the effects of policy reforms promoted by IMF on state capacity in 131 developing countries between 1985 and 2014. The study findings were recently published in the American Journal of Sociology.
The research found that IMF-imposed privatisation, deregulation and public service retrenchment have resulted in developing country bureaucracies’ diminishing capacity to successfully regulate the economy, in a way that protects the interests of both society and business.
“We found that the structural conditions seeking to rapidly overhaul domestic institutional arrangements to be counterproductive. Consequently, the IMF’s attempts to shape developing countries’ bureaucracies in the image of those in high-income countries are misguided,” Prof. Kentikelenis said.