Global Horse Trading: IMF loans for votes in the United Nations Security Council  

Dreher, Axel, Jan-Egbert Sturm, and James Raymond Vreeland. 2009. Global Horse Trading: IMF loans for votes in the United Nations Security Council. European Economic Review 53 (7):742757.

    Abstract: We find that countries serving as temporary members of the UN Security Council receive favorable treatment from the IMF in terms of both program participation and number of conditions. We argue that this is because the UN Security Council votes on issues important to the major shareholders of the IMF – issues such as imposing sanctions and going to war. The major shareholders, namely, the United States, Japan, Germany, France and the United Kingdom, use their influence at the IMF to ensure favorable treatment from the Fund for temporary members of the UN Security Council. We substantiate our claim using panel data for 191 countries over the period 1951 to 2004. Our results indicate a robust positive relationship between temporary UN Security Council membership and participation in IMF programs, even after accounting for economic and political factors, as well as regional and country effects, and duration dependence. There is also evidence that UNSC membership reduces the number of conditions included in IMF programs. The size of the loan, however, is not affected by UNSC membership. The paper contributes to the growing literature showing that the IMF is abused by major powers to pursue international political goals. We conclude with recommendations for the reform of both international institutions.

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