The effects of IMF policies on the macroeconomic performance of developing countries

The International Monetary Fund (IMF) and World Bank, which established in 1944 according to the Bretton Woods agreement in which determines the essentials of international monetary system, become a financial source of developing countries. While the mission of IMF is to finance the balance of payments deficits of countries, the mission of World Bank was to finance the reconstruction of nations devastated by World War II.In this dissertation, firstly, a general information about IMF and the importance of IMF on developing countries will be studied. Then the policy applications of IMF in these countries and criticisms on IMF will be analyzed. Also a literature review about the macroeconomic effects of IMF on developing countries, the methodologies used in these studies and the macroeconomic situation before and after IMF in this countries will be explained. The effects of IMF credits on per capita GDP will be investigated for developing countries in the application section.The ordinary least square (OLS) method is used to investigate the effects of IMF policies on per capita GDP of 24 developing countries for the 1988-2007 period in this dissertation. The effect is analyzed seperately for each country.The effects of IMF policies on per capita GDP in developing countries can be summarized as follows: i) Negatif effect on IMF policies on per capita GDP is found in six countries (Algeria, China, Egypt, Thailand, Jordan and Brazil). ii) For nine countries (Bolivia, Dominic Republic, Ecuador, Peru, Tunusia, Bulgaria, Romania, Argentina and Mexico), positive effect of IMF policies on per capita GDP is found. iii) No effect of IMF policies on per capita GDP is found in the rest of other nine countries (Morocco, Ukrania, Russian Federation, Turkey, Hungary, South Africa, Chile, Uruguay, Venezuela). In conclusion, it may be argued that it is not possible to say about the net effects of IMF policies on per capita GDP.While there is a positive macroeconomic effects of IMF programs on balance of payments and inflation variables, there is no consensus on the net effects of IMF programs on other macroeconomic variables paralel to the literature. In other words, for the period and countries studied in this dissertation, there is no consensus about the effects of IMF programs on macroeconomic variables.