The Role of International Financial Institutions on Economic Stability: A Study of Developing Countries

Developing countries and developing countries transitioning to liberal markets post-communism have suffered through considerable economic instabilities, market volatilities and political crises which have highlighted the need for guidance and support from the international community, specifically those facilitating liberal economics, free-trade and economic openness. There is no doubt that international financial institutions play a crucial role in international finance as well as the stability of the global markets. The aim of international financial institutions, beyond the protection and promotion of free-trade, globalization and maintenance of the global economic order should be supporting and providing guidance for developing countries from many different aspects in order to ensure stability in their markets which inevitably impacts regional and at times global financial strength. Through analyzing the policy-guidance, financial injections, and facilitation of institutions such as the World Bank and the International Monetary Fund (IMF) on developing countries and their outcomes, the aim of this paper will be to analyze the impact of guidance, policies and general role of international financial institutions on economic stability in developing countries through certain macro-economic indicators as well as the overall health and stability of their economies, financial markets etc. The paper will also highlight the impact of these institutions on political stability and state-building in developing countries.