IDEAS home Printed from https://ideas.repec.org/a/spr/revint/v11y2016i1p1-23.html
   My bibliography  Save this article

The effects of the IMF on expropriation of foreign firms

Author

Listed:
  • Glen Biglaiser
  • Hoon Lee
  • Joseph Staats

Abstract

This paper seeks to explain the determinants of foreign expropriation in the developing world. We argue that the International Monetary Fund (IMF) helps to reduce the likelihood of nationalization because of the direct leverage the Fund holds over borrowers, especially as expropriation is a blatant violation of international property rights. Using expropriation data from 1961 to 2006, and several different measures for the Fund, we find that countries under IMF agreements are less likely to nationalize foreign firms. We also show that the Fund’s influence is greatest when the IMF loan represents a larger share of the borrower country’s gross domestic product (GDP) as well as in countries with weaker political institutions. The takeaway is that IMF continues to influence policy choices in the developing world. Copyright Springer Science+Business Media New York 2016

Suggested Citation

  • Glen Biglaiser & Hoon Lee & Joseph Staats, 2016. "The effects of the IMF on expropriation of foreign firms," The Review of International Organizations, Springer, vol. 11(1), pages 1-23, March.
    • Handle: RePEc:spr:revint:v:11:y:2016:i:1:p:1-23
    DOI: 10.1007/s11558-015-9226-8
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11558-015-9226-8
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11558-015-9226-8?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hajzler, Christopher, 2014. "Resource-based FDI and expropriation in developing economies," Journal of International Economics, Elsevier, vol. 92(1), pages 124-146.
    2. Jodice, David A., 1980. "Sources of change in Third World regimes for foreign direct investment, 1968–1976," International Organization, Cambridge University Press, vol. 34(2), pages 177-206, April.
    3. Mr. Alex Mourmouras & Mr. Peter Rangazas, 2004. "Conditional Lending Under Altruism," IMF Working Papers 2004/100, International Monetary Fund.
    4. Dreher, Axel & Rupprecht, Sarah M., 2007. "IMF programs and reforms -- inhibition or encouragement?," Economics Letters, Elsevier, vol. 95(3), pages 320-326, June.
    5. Edwards, Sebastian, 1989. "The international monetary fund and the developing countries: A critical evaluation," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 31(1), pages 7-68, January.
    6. Cukierman, Alex & Tommasi, Mariano, 1998. "When Does It Take a Nixon to Go to China?," American Economic Review, American Economic Association, vol. 88(1), pages 180-197, March.
    7. World Bank, 2015. "World Development Indicators 2015," World Bank Publications - Books, The World Bank Group, number 21634, December.
    8. Collier, Paul & Gunning, Jan Willem, 1999. "The IMF's Role in Structural Adjustment," Economic Journal, Royal Economic Society, vol. 109(459), pages F634-51, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ramin Dadasov & Carsten Hefeker & Oliver Lorz, 2017. "Natural resource extraction, corruption, and expropriation," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(4), pages 809-832, November.
    2. Leslie Johns & Rachel L. Wellhausen, 2021. "The price of doing business: Why replaceable foreign firms get worse government treatment," Economics and Politics, Wiley Blackwell, vol. 33(2), pages 209-243, July.
    3. Nicole Janz & Noel Johnston & Paasha Mahdavi, 2022. "Expropriation and human rights: does the seizure of FDI signal wider repression?," The Review of International Organizations, Springer, vol. 17(4), pages 847-875, October.
    4. Glen Biglaiser & Hoon Lee & Joseph L Staats, 2017. "The effects of political and legal constraints on expropriation in natural resource and manufacturing sectors," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 20(4), pages 311-333, December.
    5. Nathan M. Jensen & Noel P. Johnston & Chia-yi Lee & Hadi Sahin, 2020. "Crisis and contract breach: The domestic and international determinants of expropriation," The Review of International Organizations, Springer, vol. 15(4), pages 869-898, October.

    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, 2011. "How soon is now? The effects of the IMF on economic reforms in Latin America," The Review of International Organizations, Springer, vol. 6(2), pages 189-213, July.
    2. 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.
    3. 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.
    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. Dreher, Axel & Walter, Stefanie, 2010. "Does the IMF Help or Hurt? The Effect of IMF Programs on the Likelihood and Outcome of Currency Crises," World Development, Elsevier, vol. 38(1), pages 1-18, January.
    6. 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.
    7. Glen Biglaiser & Hoon Lee & Joseph L Staats, 2017. "The effects of political and legal constraints on expropriation in natural resource and manufacturing sectors," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 20(4), pages 311-333, December.
    8. 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.
    9. 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.
    10. Colen, Liesbeth & Persyn, Damiaan & Guariso, Andrea, 2016. "Bilateral Investment Treaties and FDI: Does the Sector Matter?," World Development, Elsevier, vol. 83(C), pages 193-206.
    11. Ariel Akerman & João Paulo Pessoa & Leonardo Weller, 2022. "The West’s Teeth: IMF conditionality during the Cold War," The World Economy, Wiley Blackwell, vol. 45(7), pages 2034-2051, July.
    12. Carmen M. Reinhart & Christoph Trebesch, 2016. "The International Monetary Fund: 70 Years of Reinvention," Journal of Economic Perspectives, American Economic Association, vol. 30(1), pages 3-28, Winter.
    13. Liesbeth Colen & Damiaan Persyn & Andrea Guariso, 2014. "What type of FDI is attracted by bilateral investment treaties?," LICOS Discussion Papers 34614, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    14. 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.
    15. 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.
    16. Nathan M. Jensen & Noel P. Johnston & Chia-yi Lee & Hadi Sahin, 2020. "Crisis and contract breach: The domestic and international determinants of expropriation," The Review of International Organizations, Springer, vol. 15(4), pages 869-898, October.
    17. Axel Dreher, 2009. "IMF conditionality: theory and evidence," Public Choice, Springer, vol. 141(1), pages 233-267, October.
    18. Lang, Valentin, 2016. "The Economics of the Democratic Deficit: The Effect of IMF Programs on Inequality," Working Papers 0617, University of Heidelberg, Department of Economics.
    19. Zaki, Mokhlis Y., 2001. "IMF-Supported Stabilization Programs and their Critics: Evidence from the Recent Experience of Egypt," World Development, Elsevier, vol. 29(11), pages 1867-1883, November.
    20. repec:zbw:rwirep:0298 is not listed on IDEAS
    21. an de Meulen, Philipp, 2011. "Labor Heterogeneity and the Risk of Expropriation in Less Developed Countries," Ruhr Economic Papers 298, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

    More about this item

    Keywords

    Expropriation; IMF; Political constraints; BITs; WTO/GATT; F5;
    All these keywords.

    JEL classification:

    • F5 - International Economics - - International Relations, National Security, and International Political Economy

    Statistics

    Access and download statistics

    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:spr:revint:v:11:y:2016:i:1:p:1-23. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.