IDEAS home Printed from https://ideas.repec.org/a/sae/jocore/v48y2004i2p194-210.html
   My bibliography  Save this article

Crisis, Conditions, and Capital

Author

Listed:
  • Nathan M. Jensen

    (Department of Political Science, Washington University, St. Louis)

Abstract

A selection model for 68 countries between 1970 and 1998 is used to test the impact of International Monetary Fund(IMF) programs on international capital markets and examine how agreements are perceived by multinational investors. Results reveal that even after controlling for the factors that lead countries to seek IMF support, IMF agreements lead to lower levels of foreign direct investment (FDI). Countries that sign IMF agreements, ceteris paribus, attract 25% less FDI inflows than countries not under IMF agreements.

Suggested Citation

  • Nathan M. Jensen, 2004. "Crisis, Conditions, and Capital," Journal of Conflict Resolution, Peace Science Society (International), vol. 48(2), pages 194-210, April.
    • Handle: RePEc:sae:jocore:v:48:y:2004:i:2:p:194-210
    DOI: 10.1177/0022002703262860
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0022002703262860
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0022002703262860?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Vreeland,James Raymond, 2003. "The IMF and Economic Development," Cambridge Books, Cambridge University Press, number 9780521016957, January.
    2. Raymond Vreeland, James, 2002. "The Effect of IMF Programs on Labor," World Development, Elsevier, vol. 30(1), pages 121-139, January.
    3. Balasubramanyam, V N & Salisu, M & Sapsford, David, 1996. "Foreign Direct Investment and Growth in EP and IS Countries," Economic Journal, Royal Economic Society, vol. 106(434), pages 92-105, January.
    4. Pastor, Manuel Jr., 1987. "The effects of IMF programs in the Third World: Debate and evidence from Latin America," World Development, Elsevier, vol. 15(2), pages 249-262, February.
    5. Graham Bird & Dane Rowlands, 2004. "The Catalytic Effect of Lending by the International Financial Institutions," Palgrave Macmillan Books, in: International Finance and the Developing Economies, chapter 12, pages 204-226, Palgrave Macmillan.
    6. Mr. Diego Saravia & Mr. Ashoka Mody, 2003. "Catalyzing Capital Flows: Do IMF-Supported Programs Work As Commitment Devices?," IMF Working Papers 2003/100, International Monetary Fund.
    7. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    8. James R. MARKUSEN, 2021. "Multinationals, Multi-Plant Economies, And The Gains From Trade," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 1, pages 3-24, World Scientific Publishing Co. Pte. Ltd..
    9. Markusen, James R. & Venables, Anthony J., 1999. "Foreign direct investment as a catalyst for industrial development," European Economic Review, Elsevier, vol. 43(2), pages 335-356, February.
    10. Beck, Nathaniel & Katz, Jonathan N., 1995. "What To Do (and Not to Do) with Time-Series Cross-Section Data," American Political Science Review, Cambridge University Press, vol. 89(3), pages 634-647, September.
    11. Hajivassiliou, Vassilis A., 1987. "The external debt repayments problems of LDC's : An econometric model based on panel data," Journal of Econometrics, Elsevier, vol. 36(1-2), pages 205-230.
    12. International Monetary Fund, 1998. "Do IMF-Supported Programs Work? A Survey of the Cross-Country Empirical Evidence," IMF Working Papers 1998/169, International Monetary Fund.
    13. Dani Rodrik, 1996. "Understanding Economic Policy Reform," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 9-41, March.
    14. Vines, David, 1990. "Growth Oriented Adjustment Programs: A Reconsideration," CEPR Discussion Papers 406, C.E.P.R. Discussion Papers.
    15. James R. Markusen & Keith E. Maskus, 2001. "Multinational Firms: Reconciling Theory and Evidence," NBER Chapters, in: Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey, pages 71-98, National Bureau of Economic Research, Inc.
    16. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(4), pages 803-832, December.
    17. Mr. Mohsin S. Khan & Mr. Sunil Sharma, 2001. "IMF Conditionality and Country Ownership of Programs," IMF Working Papers 2001/142, International Monetary Fund.
    18. Schultz, Kenneth A. & Weingast, Barry R., 2003. "The Democratic Advantage: Institutional Foundations of Financial Power in International Competition," International Organization, Cambridge University Press, vol. 57(1), pages 3-42, January.
    19. Przeworski, Adam & Vreeland, James Raymond, 2000. "The effect of IMF programs on economic growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 385-421, August.
    20. Dicks-Mireaux, Louis & Mecagni, Mauro & Schadler, Susan, 2000. "Evaluating the effect of IMF lending to low-income countries," Journal of Development Economics, Elsevier, vol. 61(2), pages 495-526, April.
    21. Gould, Erica R., 2003. "Money Talks: Supplementary Financiers and International Monetary Fund Conditionality," International Organization, Cambridge University Press, vol. 57(3), pages 551-586, July.
    22. Jensen, Nathan M., 2003. "Democratic Governance and Multinational Corporations: Political Regimes and Inflows of Foreign Direct Investment," International Organization, Cambridge University Press, vol. 57(3), pages 587-616, July.
    23. Li, Quan & Resnick, Adam, 2003. "Reversal of Fortunes: Democratic Institutions and Foreign Direct Investment Inflows to Developing Countries," International Organization, Cambridge University Press, vol. 57(1), pages 175-211, January.
    24. Roland Vaubel, 1996. "Bureaucracy at the IMF and the World Bank: A Comparison of the Evidence," The World Economy, Wiley Blackwell, vol. 19(2), pages 195-210, March.
    25. Venables, Anthony J., 1999. "Fragmentation and multinational production," European Economic Review, Elsevier, vol. 43(4-6), pages 935-945, April.
    26. Dell, Sidney, 1982. "Stabilization: The political economy of overkill," World Development, Elsevier, vol. 10(8), pages 597-612, August.
    27. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Glen Biglaiser & Karl DeRouen, 2010. "The effects of IMF programs on U.S. foreign direct investment in the developing world," The Review of International Organizations, Springer, vol. 5(1), pages 73-95, March.
    2. Molly Bauer & Cesi Cruz & Benjamin Graham, 2012. "Democracies only: When do IMF agreements serve as a seal of approval?," The Review of International Organizations, Springer, vol. 7(1), pages 33-58, March.
    3. Graham Bird, 2007. "The Imf: A Bird'S Eye View Of Its Role And Operations," Journal of Economic Surveys, Wiley Blackwell, vol. 21(4), pages 683-745, September.
    4. James Vreeland, 2006. "IMF program compliance: Aggregate index versus policy specific research strategies," The Review of International Organizations, Springer, vol. 1(4), pages 359-378, December.
    5. Oberdabernig, Doris A., 2013. "Revisiting the Effects of IMF Programs on Poverty and Inequality," World Development, Elsevier, vol. 46(C), pages 113-142.
    6. Mr. Ali J Al-Sadiq, 2015. "The Impact of IMF-Supported Programs on FDI in Low-income Countries," IMF Working Papers 2015/157, International Monetary Fund.
    7. Martin Steinwand & Randall Stone, 2008. "The International Monetary Fund: A review of the recent evidence," The Review of International Organizations, Springer, vol. 3(2), pages 123-149, June.
    8. Ruben Atoyan & Patrick Conway, 2006. "Evaluating the impact of IMF programs: A comparison of matching and instrumental-variable estimators," The Review of International Organizations, Springer, vol. 1(2), pages 99-124, June.
    9. Dreher, Axel, 2006. "IMF and economic growth: The effects of programs, loans, and compliance with conditionality," World Development, Elsevier, vol. 34(5), pages 769-788, May.
    10. Axel Dreher & Jan-Egbert Sturm & James Raymond Vreeland, 2010. "Does Membership on the UN Security Council Influence IMF Conditionality?," KOF Working papers 10-262, KOF Swiss Economic Institute, ETH Zurich.
    11. Thomas Stubbs & Bernhard Reinsberg & Alexander Kentikelenis & Lawrence King, 2020. "How to evaluate the effects of IMF conditionality," The Review of International Organizations, Springer, vol. 15(1), pages 29-73, January.
    12. Adeel Ahmad DAR & Taj MUHAMMAD & M. Wasif SIDDIQI, 2020. "Bureaucratic Quality and FDI Inflows Nexus: A South Asian Perspective," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 149-168, September.
    13. Roberto Benelli, 2003. "Do IMF-Supported Programs Boost Private Capital Inflows? the Role of Program Size and Policy Adjustment," IMF Working Papers 2003/231, International Monetary Fund.
    14. Songying Fang & Erica Owen, 2011. "International institutions and credible commitment of non-democracies," The Review of International Organizations, Springer, vol. 6(2), pages 141-162, July.
    15. David G. Ortiz & Sergio Béjar, 2013. "Participation in IMF-sponsored economic programs and contentious collective action in Latin America, 1980–2007," Conflict Management and Peace Science, Peace Science Society (International), vol. 30(5), pages 492-515, November.
    16. Carlos De Resende, 2007. "IMF-Supported Adjustment Programs: Welfare Implications and the Catalytic Effect," Staff Working Papers 07-22, Bank of Canada.
    17. Shimaa Elkomy & Hilary Ingham & Robert Read, 2015. "Economic, Institutional & Political Determinants of FDI Growth Effects in Emerging & Developing Countries," Working Papers 95922154, Lancaster University Management School, Economics Department.
    18. Barry Eichengreen & Poonam Gupta & Ashoka Mody, 2008. "Sudden Stops and IMF-Supported Programs," NBER Chapters, in: Financial Markets Volatility and Performance in Emerging Markets, pages 219-266, National Bureau of Economic Research, Inc.
    19. Ponce, Aldo, 2010. "Foreign Direct Investment and Civil Rights: Testing Decreasing Returns to Civil Rights," MPRA Paper 22020, University Library of Munich, Germany.
    20. Hoon Lee & Joseph L. Staats & Glen Biglaiser, 2012. "The importance of legal systems for portfolio investment in the developing world," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 15(4), pages 339-358, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:jocore:v:48:y:2004:i:2:p:194-210. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://pss.la.psu.edu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.