A bottom-up approach to international cooperation: econocrats' role in compliance with IMF agreements
"Modern international relations is a system of hierarchically-organized sovereign entities interacting with each other in the absence of hierarchical structures between them. Building on this observation, Realists and -to some degree- Neoliberal institutionalists emphasize the central role of nation-states as unitary actors in international relations theory. They argue that the anarchic nature of the system forces sovereign states to act alike, and therefore domestic institutions have no relevance for the question of how states conduct their foreign policies. This logic has been brought under scrutiny by scholars who seek more nuanced explanations for variation in states' responses to similar external shocks, their propensity to fight or cooperate, and their strategies in international negotiations. One particular research question that would benefit from relaxing the unitary actor assumption involves the effects of intervention in domestic politics by international institutions. Bearing few tangible means to influence domestic politics at their disposal, international institutions might facilitate cooperation by using economic assistance or membership as rewards for certain countries. Others, for pragmatic reasons, might take an indirect path towards change in state behavior. These institutions recognize that implementation of an agreement does not necessarily follow a top-down pattern. Instead, various domestic actors get involved in different stages of cooperation alongside the executive who sits at the international negotiation table. As demonstrated by the international cooperation literature, it is possible for international institutions to find allies in domestic non-governmental organizations (NGOs) and interest groups that would oversee the implementation of agreements. Building on this literature, this dissertation focuses on another important domestic actor whose role in international cooperation has long been ignored. Bureaucrats are central to the analysis of how exactly domestic politics matters because not only do they participate in every stage of the cooperation process, but they also serve as catalysts that provide communication between the international and domestic levels. Intuitive thinking suggests that international institutions which possess a closely-knit network with top-level bureaucrats in charge of negotiation and implementation stages in member states would seldom run into any problems of noncompliance. Put simply, some institutions might have an advantage in using the back door into domestic politics, and presumably they might be more successful in guaranteeing full implementation of agreements. The case of International Monetary Fund (IMF), however, presents an interesting puzzle. IMF is one of those international institutions that enjoy regular dialogue with bureaucrats employed in relevant domestic institutions of borrowing states like the finance ministry, central bank, treasury and banking regulation agencies. These are the experts who negotiate conditionality agreements with the IMF and later implement the terms of these agreements, hence compliance lies largely in their hands. In addition to sharing a common understanding about sound macroeconomic policies with their international counterparts, they also often come from similar educational backgrounds and walk similar career paths. Then, the question is: Given that the world's economy bureaucrats constitute the IMF, and that any conditionality package is freely negotiated, why would these domestic actors ever fail to comply with the provisions of the conditionality agreements? This dissertation presents a novel way to study the role of domestic politics in international relations. Instead of focusing on the confining effects of certain actors (i.e. domestic veto institutions), it follows a bottom-up approach by theorizing the conditions under which bureaucratic networks help international institutions in their efforts to guarantee compliance and achieve their goals. I use a family of formal models to analyze the effects of delegation on the implementation of the IMF agreements. Implications of these models point out three important factors that affect variation if compliance: bureaucratic ambition, socialization with international counterparts, and institutional autonomy. Hypotheses generated from this theoretical section are evaluated using both quantitative and qualitative tools. An empirical analysis of 279 IMF programs suggests that there is positive and significant correlation between having conservative economy bureaucrats in office and high implementation levels. Findings also hint these bureaucrats' success in convincing IMF officials for waivers and lower conditionality. When we turn to case studies, it becomes evident that positioning themselves as ""mediators"" and using the same language as the Fund officials, conservative economy bureaucrats or econocrats are able to broker an agreement that will be implemented fully. On the other hand, bureaucrats without relevant skills, ambition or social networks do have a hard time communicating the conditions of their country and end up with partial implementation. This link between the policy preferences of the implementer and the implementation level explains why IMF demands its clients to increase bureaucratic capacity and autonomy. Decentralization and empowerment of bureaucracy might provide advantages to the Fund but, that said, this influence is not without its drawbacks. IMF's efforts to form an alliance with domestic bureaucracies might backfire and exacerbate domestic conflicts in already unstable borrowing countries. Examples in this study show that during program implementation public discords between office-seeking politicians and conservative econocrats occur frequently, followed by resignations and dismissals. More generally speaking, this study suggests that the seemingly less controversial strategies of intervention used by international institutions do not generate uniform results in all sovereign nation-states. Success or failure of ""outside-in"" influence on economic policy-making varies with certain aspects of domestic politics, especially of bureaucratic agencies. This dissertation leads to a better understanding of the inner mechanisms of implementation, which in turn contributes to the construction of a more realistic and complete account of international cooperation."
IMF, bureaucracy, economics, delegation, International Monetary Fund, central bank, treasury, finance, econocrat, conditionality, compliance, implementation, cooperation, autonomy, socialization
University of Illinois - Urbana-Champaign
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University of Illinois at Urbana-Champaign