The Impact of IMF-Supported Programs on FDI in Low-income Countries

It is common for IMF-supported adjustment programs with low-income member countries(LICs) to project that they will facilitate FDI inflows. The main objective of this paper is toempirically examine this hypothesis. Using an unbalanced panel dataset for 73 low-incomecountries over the period 1980–2012, and two different econometric methods that address theselection-bias problem, the empirical results robustly show that participating in IMF-supportedprogram is associated with a significant increase in FDI inflows.