International institutions and credible commitment of non-democracies

Fang, Songying; Owen, Erica

doi:10.1007/s11558-011-9102-0

Cited by 46 publications

(23 citation statements)

References 41 publications

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“…This argument is not necessarily incompatible with that made byFang and Owen (2011), who argue that non-democratic states have a greater need to employ IMF agreements as a means to make their promises of reform more credible. It is possible both for participation in an IMF agreement to be the only option available to autocracies to make their commitments to reform more credible, and for the effectiveness of this device to be weak.…”

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confidence: 93%

Democracies only: When do IMF agreements serve as a seal of approval?

2011

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Conditional lending by the IMF is predicated, in part, on the belief that IMF programs are associated with increased capital inflows to participating countries. This belief is generally consistent with theoretical arguments in the academic literature (e.g., Bird and Rowlands 1997;Bordo et al. 2004) but the empirical literature often finds otherwise (e.g., Jensen 2004). This paper argues that the effect of IMF agreements on a country's access to foreign direct investment (FDI) depends on its domestic institutions. Access to FDI depends on a country's ability to credibly commit to implementation, and this ability varies systematically across regime type. The theory is empirically tested using a treatment effects model with a Markov transition in the treatment equation in a dataset covering 142 countries from 1976 to 2006. We find that in democracies IMF program participation has a strong positive effect on FDI inflows and in autocracies participation has a weak negative effect.

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confidence: 93%

Democracies only: When do IMF agreements serve as a seal of approval?

2011

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“…According to Schneider (2010), European Union (EU) governments attempting to increase their re-election prospects can increase their country's share in the EU's budget prior to an election. Fang and Owen (2009) find that especially non-democracies use IMF status as a commitment device. In this paper, we ask a related question, namely whether membership in international organizations (IOs) increases inflows of foreign direct investment (FDI).…”

Section: Introductionmentioning

confidence: 93%

Membership Has its Privileges – The Effect of Membership in International Organizations on FDI

2010

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may

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“…International agreements provide contractual frameworks supporting liberal economic policies, thus providing foreign investors some assurance of a commitment to these policies (Buthe and Milner 2008, Fang and Owen 2011, UNCTAD 2007. The dissemination by and transparency of information in international institutions facilitates the identification, monitoring, and punishment of those not complying with the rules or contracts (Buthe and Milner 2008, Mansfield, Milner, and Rosendorff 2002, Mansfield and Reinhardt 2008.…”

Section: The Effectiveness Of International Institutionsmentioning

confidence: 99%

“…Recently, the study and classification of authoritarian institutions is a hot topic in political science (Levitsky and Way 2002, Magaloni 2008, Gandhi 2008, Geddes 2003, Fang and Owen 2011, Rosendorff and Shin 2011. This dissertation contributes to this set of literature by uncovering how variation in domestic institutions and participation in international agreements of authoritarian countries influences FDI inflows to those nations.…”

Section: Challenging Conventional Wisdommentioning

confidence: 99%

The Politics of Foreign Direct Investment in Authoritarian Regimes

Bastiaens

2015

International Interactions

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iv Existing scholarship does not account for why foreign direct investment (FDI) inflows have been increasing to many authoritarian countries in recent decades, with some authoritarian developing countries attracting levels of FDI similar to those in democratic developing countries. This dissertation argues that while authoritarian countries are in general more risky than democratic countries, this risk can be minimized when authoritarian regimes are constrained from both "above" and "below." Authoritarian regimes that sign international investment treaties signal FDI-friendly policies and are constrained from backtracking on those policies. At the same time, authoritarian regimes that allow some degree of citizen participation in policymaking are constrained from deviating from FDI-friendly policies, which are generally preferred by citizens. In sum, it is hypothesized that authoritarian regimes that sign international investment treaties and maintain relatively high levels of citizen participation will attract the most FDI inflows. This hypothesis is tested using micro and macro level empirical evidence. Specifically, multilevel ordered probits of survey data on citizen preferences for FDI and statistical regressions of panel data on global FDI inflows are conducted. Estimation results confirm both the theoretical foundations and formal hypothesis of this dissertation: citizens in authoritarian countries view FDI inflows as welfare-enhancing and authoritarian countries with bilateral investment treaties and high levels of citizen participation attract the most FDI inflows. Additionally, results from an original survey of U.S. foreign investors reveal that multinational companies are aware of and value international investment treaties and freedom of association in host nations, thereby providing key primary evidence in support of the hypothesis. Finally, a comparative case study of Jordan and Syria further illustrate the micro-foundations of the argument. While both Jordan and Syria have signaled a dedication to liberal economic policies, Jordan has been the successor in attracting FDI inflows because of its participatory decision-making processes. This dissertation contributes to international political economy, international organization, and authoritarian political institution research by illuminating the domestic factors that provide credibility of compliance to international treaties signed by authoritarian countries. Previous literature has failed to address the variation of foreign investment inflows to authoritarian regimes and the role of compliance to international investment treaties in attracting these investment inflows to authoritarian countries.

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International institutions and credible commitment of non-democracies

Abstract: Non-democracies, Credible commitment, Economic reforms, The IMF, F53, O57, P33,

Cited by 46 publications

References 41 publications

Democracies only: When do IMF agreements serve as a seal of approval?

Democracies only: When do IMF agreements serve as a seal of approval?

Membership Has its Privileges – The Effect of Membership in International Organizations on FDI

The Politics of Foreign Direct Investment in Authoritarian Regimes

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