Are IMF programs raising greenhouse gas emissions in the Global South?

Abstract

Abstract Are International Monetary Fund (IMF) programs raising greenhouse gas emissions in the Global South? I argue powerful actors structure markets in ways exacerbating climate change. This works through the IMF’s imposition of market coercion—specifically, currency devaluation, global openness and fiscal pressures from austerity. Countries respond to these conditions through extractivist strategies and productive growth to increase exports. To investigate this relationship, I use instrumental variables and difference-in-difference analyses for 130 countries between 1980 and 2018. Results show emissions increase from structural lending conditions but not when conditions afford borrowers more flexibility. This effect takes several years to manifest. While there is no single sector responsible for this change, agriculture, land-use changes and, to some extent, industry, have notable emission effects following an IMF program. Global South emissions are partly rooted in imposed austerity which raises important political questions about the climate crisis, development and international finance.