Regionalizing Multilateralism: Estimating the Power of Potential Regional Voting Blocs in the IMF

Abstract

This paper explores the voting power of hypothetical regional voting blocs in the Executive Board of the International Monetary Fund. We first discuss the prospect of regionally defined groups becoming more significant in the Fund’s decision-making process. After briefly outlining the IMF’s formal decision procedures, including its weighted voting system, use of special majorities, and the function of voting groups in the Fund’s Executive Board we define three indices of a priori voting power — the Banzhaf, Johnston, and Shapley-Shubik indices — which are then applied to existing voting groups. Following this we simulate several regionally defined a priori coalitions and their potential to influence outcomes in passing resolutions in the Fund using a simple majority. The coalitions we specify are based on the assumption that members of the IMF will form into voting blocs based on regionally-defined preferences. The procedures employed use existing voting weights to project the relative strengths of alternative regional blocs that could emerge within the IMF. Our results indicate that the United States would have the greatest voting power in almost all scenarios. A voting bloc comprised of European countries, however, would be able to dominate the United States unless the U.S. formed an Asia-Pacific bloc. Japan, the PRC, and other Asian countries appear to be unable to form voting blocs that would provide them with more voting power than the United States. We have benefited from the comments of three anonymous referees. We also thank Thomas Bräuninger for modifying his source code to accommodate our application of the Shapley-Shubik and Banzhaf indices.