Structural adjustment, alienation, and mass protest

Abstract

The International Monetary Fund (IMF) is (in)famous for its structural adjustment programs, which provide fresh credit for borrowing governments in exchange for market-liberalizing policy reforms. While studies have documented a causal relationship between structural adjustment and political instability, scholarly understanding of the mechanisms underlying this relationship remain perfunctory. The received wisdom is that IMF policy conditions generate material hardship which then drives political instability. We advance an additional pathway-that instability is also prompted by alienation effects related to the foreign imposition of policies. Drawing on a sample of up to 168 countries between 1980 and 2014, we test for the presence of both mechanisms. Our results suggest that there are alienation effects, indicated by a persistent protest-inducing impact of IMF program participation when controlling for market-liberalizing conditions, and especially when programs are concluded by left-wing governments and non-repeat borrowers. We also find evidence of hardship effects, indicated by a positive relationship between the intensity of fiscal austerity required and the number of protests. Our findings have important implications for the relationship between structural adjustment, contentious politics, and the role of international organizations in domestic policy reform.

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