The International Monetary Fund and Capital Account Liberalization: A Case of Failed Norm Institutionalization

The paper traces the evolution of the IMF’s thinking on capital account liberalization from the early 1990s to the present. In doing so, we draw attention to the reciprocal interaction of two sets of mechanisms – inside-out and outside-in – that trigger policy norm change within the “norm circle” (see Introduction to this volume). Specifically, we argue that both organizational culture centered around the reigning neoliberal economic paradigm inside the Fund and the level of acceptance of specific economic ideas outside the Fund are crucial mechanisms in order to understand the rise of the capital account liberalization policy norm and its failed institutionalization.