International financial institutions: forms, functions, and controversies

Having sizeable lending capacity and unparalleled epistemic power, international financial institutions (IFIs) are the world’s most powerful international organizations. One class of IFIs is primarily focused on lending for development projects, and commands portfolios of hundreds of millions of dollars that can transform infrastructure and social services in low- and middle-income countries. Another class is geared toward providing financial assistance to countries in economic crisis and has an active role in shaping their policy environments. Through these activities, IFIs alter the development trajectories of borrowing countries, for better or for worse. This article reviews these debates. We first map IFI forms and functions and examine their governance structures. Subsequently, we examine two of the leading controversies surrounding IFI activities: the problematic impact of these activities on social and environmental outcomes; and the charge that they impinge on developing countries’ policy sovereignty. We conclude by outlining fruitful directions for future research.