The International Monetary Fund, power politics, and the changing political economy of the twenty first century

The governance of the global economy is in a constant state of change. Since the creation of the Bretton Woods system, the International Monetary Fund has had to pursue a series of reforms to meet the changing demands of the international monetary system. At times, the Fund's institutional design has been adjusted to reflect the rise and decline in economic fortunes of member states. Other times the Fund has been resistant to change. However, the original design has proved to be durable and has overcome a number of historical challenges. Currently, two realities are challenging the institutional design of the Fund leading to seriously consideration to reform the governance of the Fund. The first factor involves emerging market economies and developing countries which are demanding equitable representation commensurate with their new found economic strength. The second factor is the ongoing legitimacy problem. For the Fund this has been a problem the Fund has never fully been able to overcome and this problem originates in the governance of the Fund. Two factors contribute to this situation: informal governance and formal Articles of Agreement. The argument made in this thesis is that power politics explicitly or implicitly define the institutional design of the Fund. Reforms will become a reality but not at the expense of the major shareholders and non-economic factors (i.e., politics) will continue to have a role in the governance of the Fund.