Reducing the Role of the State in the Economy: A Conceptual Exploration of IMF and World Bank Prescriptions

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Abstract
A policy and scholarly consensus is emerging on reducing the role of the state in the economy, but with relatively little consideration of its meaning and potential consequences. Six different forms of state economic intervention are distinguished in this article (influence, regulation, mediation, distribution, production, and planning) and combined to characterize different national economic regimes. IMF and World Bank recommendations for policy reform are then identified, and the consequences of those recommendations are assessed for different forms of economic intervention. On balance, stabilization and structural adjustment programs would appear to facilitate a major continuation of some forms of intervention (influence and mediation), redirect others (regulation, mediation, and distribution), and reduce those associated with state production and planning. These differential effects of the programs have far-reaching political implications, can be internally inconsistent, and are not necessarily conducive to development.

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