Speaker: Chungshik Moon received his PhD in political science from Florida State University (2014). His current research interests include the causes and effects of economic globalisation and development and institutional performance in autocracies. His publications appear in International Studies Quarterly, the Journal of Conflict Resolution, and the Journal of East Asian Studies. He has various working papers examining the effect of an IMF program on foreign direct investment (FDI), the political consequence of FDI inflows in authoritarian regimes, the effect of bilateral investment treaties on FDI inflows, and the political conditions of foreign aid effectiveness.
Paper Title: Curse of Friendship: IMF program, Friendship with the United States and Foreign Direct Investment.
Paper Abstract: Under what conditions IMF programs catalyze foreign finance? In this paper, we contend that the effect of an IMF program in catalyzing foreign direct investment (FDI) hinges on whether or not American strategic interests intervene in IMF lending pro- cess. Specifically, IMF programs arranged following standard technocratic procedure and without undue American strategic intervention should credibly appeal to foreign investors, thus catalyze more FDI inflows in years following an IMF program. In com- parison, when IMF programs are influenced by “high politics” and arranged under American strategic interests, the programs lose credibility to be strictly designed and enforced, thus foreign investors will be less willing to extend investment, resulting in reduction of FDI inflows in years following the programs. In sum, strategic allies of the U.S. experience less onerous IMF programs when they participate in them, yet friend- ship with the United States reduce the credibility of IMF programs, thus ultimately brings in negative consequences when it comes to attracting FDI. Building on existing scholarship on the IMF, we capture American strategic interests with United Nations General Assembly voting similarity and empirically test our argument using datasets on IMF programs and FDI. We find that friends of the U.S., those with higher affinity scores of United Nations General Assembly voting, are less able to attract FDI with IMF programs.