Voting Power in the Bretton Woods Institutions

Warwick Economic Working Paper No. 718

34 Pages Posted: 7 Feb 2005

See all articles by Dennis Leech

Dennis Leech

University of Warwick - Department of Economics

Robert Leech

University of London - Birkbeck College

Date Written: November 2004

Abstract

The constitutions of the Bretton Woods Institutions require decisions to be taken by weighted voting: each member country possesses a number of votes, depending on its quota allocation, all of which must always be cast as a bloc. This leads to a problem of democratic legitimacy since a member's influence or voting power within such decision-making systems does not necessarily correspond to its voting weight. In previous work it has been shown that the present system of weighted voting in the IMF gives disproportionate influence to the USA at the expense of all other members. This effect occurs in both the board of governors and the executive board. This paper looks at the power implications of the structure of the IMF and World Bank executive boards (in which members are grouped into constituencies that cast their combined weighted votes as a bloc) from the point of view of formal voting power (using the Penrose power index). A criticism that is frequently made is that the present constituency structure and voting weights work to enhance the power of the developed and creditor countries at the expense of the poor, and that many countries are effectively impotent; we show that the weighted voting system adds to this anti-democratic bias and produces some unintended effects (for example the disfranchisement of Estonia in the Nordic/Baltic constituency and of five Central American republics in the Spanish/Mexican/Venezuelan constituency, even though in neither case is there a dictator). We argue generally that the voting power approach is more than just the calculation of power indices and can in fact produce solid facts by identifying cases where members of weighted voting bodies are actually disfranchised.

Keywords: IMF, World Bank, voting power, power indices, Penrose index, weighted voting

JEL Classification: C71, D71, D72, F02

Suggested Citation

Leech, Dennis and Leech, Robert, Voting Power in the Bretton Woods Institutions (November 2004). Warwick Economic Working Paper No. 718, Available at SSRN: https://ssrn.com/abstract=586651 or http://dx.doi.org/10.2139/ssrn.586651

Dennis Leech (Contact Author)

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

Robert Leech

University of London - Birkbeck College ( email )

Malet Street
London, WC1E 7HX
United Kingdom

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