The Impact of IMF-Supported Programs on FDI in Low-income Countries

July 16, 2015

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

It is common for IMF-supported adjustment programs with low-income member countries (LICs) to project that they will facilitate FDI inflows. The main objective of this paper is to empirically examine this hypothesis. Using an unbalanced panel dataset for 73 low-income countries over the period 1980–2012, and two different econometric methods that address the selection-bias problem, the empirical results robustly show that participating in IMF-supported program is associated with a significant increase in FDI inflows.

Subject: Balance of payments, Economic sectors, Foreign direct investment, Privatization

Keywords: FDI flow, FDI inflow, FDI Inflows, FDI location, Foreign direct investment, Global, IMF participation variable, IMF program, IMF-ECF program, IMF-supported program, IMF-Supported Programs, Low-income Countries, outcome equation, Privatization, Propensity Score Matching, Treatment Effects Model, WP

Pages:
38
Volume:
2015
DOI:
https://doi.org/10.5089/9781513502342.001
Issue:
157
Series:
Working Paper No. 2015/157
Stock No:
WPIEA2015157
ISBN:
9781513502342
ISSN:
1018-5941

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