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Does Membership in International Organizations Increase Governments’ Credibility? Testing the Effects of Delegating Powers

  • Axel Dreher

    ()

    (Georg-August University Goettingen)

  • Stefan Voigt

    ()

    (Philipps-University Marburg)

This paper analyzes whether nation-state governments can increase their credibility by becoming members of international organizations. Credibility is an important asset because it determines the real interest rate and is expected to have an important impact on investment and growth. It is hypothesized that the degree of delegation to international organizations can improve the credibility of nation-state governments. This hypothesis is tested by introducing three new indicators for international delegation. On the basis of panel data for up to 136 countries and the time period from 1984 to 2004, membership in international organizations is significantly and robustly linked with better credibility, here proxied for by country risk ratings. Two more results stand out: the longer a country has had a high level of membership, the higher its credibility, ceteris paribus; and: the credibility-enhancing effect is strongest in countries whose domestic institutions are weak.

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File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/19-2008_dreher.pdf
File Function: First version, 2008
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Paper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 200819.

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Length: 41 pages
Date of creation: 2008
Date of revision:
Publication status: Forthcoming in
Handle: RePEc:mar:magkse:200819
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