The Contribution of the IMF and the World Bank to Economic Freedom

We analyse the effect of IMF and World Bank policies on the composite index of economic freedom by Gwartney et al. (2000) as well as its sub-indexes, using a panel of 85 countries observed between 1970 and 1997. With respect to the Bank, we find that the number of projects has a positive impact on overall economic freedom, while the effect of the amount of World Bank credits is negative. These effects are stronger during the 1990s than in earlier periods. There is no clear relationship between credits and programs of the IMF and economic freedom.