2022 SER Prize

The SER Best Article Prize committee (Elizabeth Thurbon [chair], Timur Ergen, and Alexandru Preda) considered all refereed articles from Volume 19 of Socio-Economic Review, including symposia papers, but not state of the art, discussion or review forum papers.  The committee looked for papers that: 1) address substantive questions and issues that have far-reaching implications and are of interest to a broad range of SER scholars; 2) clearly and effectively engage prior theory and research; 3) use state-of-the-art research methods to analyze new or existing data sets in ways that either bring important new phenomena to light or substantially revise existing understanding of socio-economic facts, trends, or relationships; 4) display theoretical and/or conceptual innovation; and 5) are written with clarity and fluidity.

The committee is delighted to announce that the winning paper is “Creating Crony Capitalism: Neoliberal Globalization and the Fuelling of Corruption” (Socio-Economic Review 19(2): 607–634), by Bernhard Reinsberg, Alexander Kentikelenis, and Thomas Stubbs

The committee decision text reads: 

This outstanding paper addresses a substantive question of major global importance: how and why do efforts to curb corruption—to rein in ‘crony capitalism’—fail?

The empirical target of the paper is the IMF’s structural adjustment programs and their impact on corruption in developing countries. As the authors observe, since the 1990s the IMF has positioned itself as a vanguard against crony capitalism. Over the past thirty years, the Fund has vigorously implemented its structural adjustment policies with a view to reducing the scope for corruption by shrinking the state through reforms centered on deregulation, liberalization and privatization. So how successful have the Fund’s corruption-busting conditionalities been, and how can we explain these outcomes?

The authors develop a striking answer to this question – one that turns both conventional policy practices and the economic theory that informs them on their head. Rather than ameliorating crony capitalism, the authors argue that conditionalities insisted upon by the IMF actually induce corruption. They do so by concentrating economic losses on a narrow range of powerful actors within the state and business community – thereby incentivizing these actors to defend their interests by being more corrupt. By helping to induce rather than reduce corruption, IMF conditionalities serve to undermine economic growth, social capital and democratic institutions and processes across the developing world.

To develop their argument, the authors draw on a new data set of IMF conditionality, based on original coding of Letters of Intent and other Memoranda between the IMF and its borrowers. Through a carefully-crafted regression analysis they test the relationship between IMF structural conditionalities and levels of corruption control, using three different sources as corruption indicators: one perception-based (the International Country Risk Guide) and two experience-based the Business and Enterprise Performance Survey and the International Crime Victims Survey). Their results show a strong positive relationship between IMF-mandated structural adjustment reforms and an increase corruption – both perceived and experienced.

Moreover, their results show that – unlike its structural conditionalities – the Fund’s stabilization conditions (including quantitative targets for monetary and fiscal policy) are not associated with an increase in corruption. The likely reason for this – the authors argue – is that these reforms do not concentrate losses so acutely, thereby lessening their corruption-inducing effect.

The findings of this paper directly challenge and substantially revise existing theoretical and policy assumptions about the relationship between IMF conditionalities and corruption. The findings are of major scholarly and practical significance for this reason. 

The IMF’s structural conditionalities – and the corruption they seek to address – impact the lives and livelihood of so many people across the globe – especially in the Global South. For this reason, the Committee believes that the paper has far-reaching implications. The paper should also interest a wide range of SER scholars, attendant as it is to the institutionalized relationship between the Global North and Global South, and the complex dynamics of power and polarization that characterize this relationship.  

The Committee congratulates the authors on their stellar achievement, and extends its thanks to all authors involved in producing such an impressive 19th volume of SER.