Do IMF Programs Disrupt Ethnic Peace? An Empirical Analysis, 1985-2006

Journal of Peace Research, 51(6), 2014

37 Pages Posted: 9 Jan 2017

See all articles by Krishna Chaitanya Vadlamannati

Krishna Chaitanya Vadlamannati

University College Dublin (UCD) - Department of Politics

Gina Maria Østmoe

Oikos—Organic Norway

Indra De Soysa

Norwegian University of Science and Technology

Date Written: January 5, 2017

Abstract

Structural adjustment programs of the IMF are often blamed for disrupting social relations by forcing austerity on vulnerable people and introducing unpopular liberalization policies. Some suggest that such interventions harm ethnic relations in developing countries because they are insensitive to the tenuous social bargains that often preserve ethnic peace. Moreover, during crises, dominant groups may seek to displace the pain of reform on others, the ethnic division of labor maybe affected differentially by reform policies, and ethnic entrepreneurs could use moments of crisis to their advantage. We test the propositions by using unique data measuring the level of ethnic tensions in a country. The results show that IMF interventions reduce conditions of ethnic enmity. These results are robust to fixed effects estimation, endogeneity, and selection effects. Moreover, IMF interventions lower ethnic tension in countries that are highly fractionalized, but they are more problematic where larger groups face each other and when larger groups are excluded from state power. These results suggest too that IMF interventions may lead to greater empowerment of excluded groups who might agitate for change during periods of economic crisis. On balance, IMF interventions, relative to continued economic woe, pacify ethnic relations in crisis-ridden countries. We find no evidence to suggest that IMF programs increase ethnic tensions, which is good news for poor countries requiring cheap loans and assistance with reforms.

Keywords: IMF, ethnic peace, economic liberalization

Suggested Citation

Vadlamannati, Krishna Chaitanya and Østmoe, Gina Maria and De Soysa, Indra, Do IMF Programs Disrupt Ethnic Peace? An Empirical Analysis, 1985-2006 (January 5, 2017). Journal of Peace Research, 51(6), 2014. Available at SSRN: https://ssrn.com/abstract=2894447

Krishna Chaitanya Vadlamannati (Contact Author)

University College Dublin (UCD) - Department of Politics ( email )

Belfield
Dublin 4
Ireland

Gina Maria Østmoe

Oikos—Organic Norway ( email )

Norway

Indra De Soysa

Norwegian University of Science and Technology ( email )

Høgskoleringen
Trondheim NO-7491, 7491
Norway

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