Conditional on Conditionality: IMF Program Design and Foreign Direct Investment

Research output: Contribution to journalArticle

10 Citations (Scopus)

Abstract

The article explores how International Monetary Fund (IMF) program design influences foreign direct investment inflows. The author argues that stricter IMF conditionality signals a program-participating government's commitment to economic reforms, as it incurs larger ex ante political cost and risks greater ex post political cost. Thus, the catalytic effect of an IMF program is conditional on conditionality: programs with stricter conditions catalyze more foreign direct investment than those with less stringent conditions. Empirical analysis of the IMF conditionality dataset supports the argument and shows that after accounting for IMF program participation, the more structural conditions included in an IMF program, the more foreign direct investment flows into the country.

Original languageEnglish
Pages (from-to)292-315
Number of pages24
JournalInternational Interactions
Volume39
Issue number3
DOIs
Publication statusPublished - 2013 Jul 1

    Fingerprint

All Science Journal Classification (ASJC) codes

  • Political Science and International Relations

Cite this