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Geopolitics and international organizations: An empirical study on IMF facilities

Listed author(s):
  • Julien Vauday

    (CEPN - Centre d'Economie de l'Université Paris Nord - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)

  • Julien Reynaud

    ()

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

There is growing awareness that the distribution of IMF facilities may not be influenced only by the economic needs of borrowers. This paper focuses on the fact that the IMF may favour geopolitically important countries in the distribution of IMF loans, differentiating between concessional and non-concessional facilities. To carry out the empirical analysis, we construct a new database that compiles a wide array of proxies for geopolitical importance for 107 IMF countries over 1990–2003, focusing on emerging and developing economies. We use a factor analysis to capture the common underlying characteristic of countries' geopolitical importance as well as a potential analysis since we also want to account for the geographical situation of the loan recipients. While controlling for economic and political determinants, our results show that geopolitical factors influence notably lending decisions when loans are non-concessional, whereas results are less robust and in opposite direction for concessional loans. This study provides empirical support to the view that geopolitical considerations are an important factor in shaping IMF lending decisions, potentially affecting the institution's effectiveness and credibility.

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Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-01330210.

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Length:
Date of creation: 2009
Publication status: Published in Journal of Development Economics, Elsevier, 2009, 89 (1), pp. 139-162. 〈10.1016/j.jdeveco.2008.07.005〉
Handle: RePEc:hal:cesptp:hal-01330210
DOI: 10.1016/j.jdeveco.2008.07.005
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01330210
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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