Money and Politics on the International Stage

James Raymond VreelandAssociate Professor

School of Foreign ServiceGeorgetown University

Presentation for Parents’ WeekendOctober 16, 2010

What do professors really do?

Who is this guy?

WEGG

The responsibilities of a professor

• Teaching

• Service

• Research

My classes

• International Political Economy– Economics: distribution of scarce resources– Politics: the role of the state in such distribution– International: how the flows of such resources across

borders plays a role• Flows: goods & service (trade), money (capital mobility), people

(immigration), pollutants (the environment), violence (terrorism)

• International Organizations– The ways international institutions impact these flows

• The IMF– Specific financial flows

Pedagogy

• Substance

• Analytical tools

• Teaching to fish

Technology in the classroom

• Professor 2.0 – bring your laptops to class

• Syllabus: http://www9.georgetown.edu/faculty/jrv24/INAF_100-14.html

• Google: http://www.google.com/search?q=james+vreeland&rls=com.microsoft:en-us&ie=UTF-8&oe=UTF-8&startIndex=&startPage=1

• Google scholar: – http://scholar.google.com/scholar?q=james%20vreeland&rls=com.microsoft:en-us&oe=UTF-8&startIndex=&startPage=1&um=1&ie=UTF-8&sa=N&hl=en&tab=ws

• Wikipedia?

Service

• (Meetings, committees)

• Advising students

• Service to the profession

– Conferences

– Reviewing research

– Giving talks…

Research

• Informs what I teach

• Keeps me on the cutting edge

• Signals to the world Georgetown faculty strength– Signal attracts great students (peers)– Signals employers the university’s caliber

A current research project…

UNSC

IMF World Bank

IMF/WB project in Ghana

The question:

• To gain leverage over one international institution can a country use its power in another international institution?

Yes.

Why?

• The US and other powerful countries, who virtually control the IMF & World Bank, care about how the UNSC votes.

• The goal of the major shareholders of the IMF:

– Get countries under a program – in case important votes come up.

• Godfather-esque: “Some day, and that day may never come, I'll call upon you to do a service for me. But uh, until that day, accept this justice as a gift on my daughter’s wedding day.”

• http://www.youtube.com/watch?v=8Bz9iXernY4&feature=fvw

A quick example

• Tanzania: 1961-1974 no IMF, no UNSC

– 1975

• UNSC member

• First IMF arrangement – exceedingly weak conditionality (credit ceiling)

IMF reply in the Washington Post (November 1, 2006):

• An IMF spokesman said “the [Tanzania] evidence is anecdotal and circumstantial.”

• To convince people, we need

– many more anecdotes

– statistical evidence (it’s not just luck)

Figure 1: Participation in IMF programsby rotating membership on the UN Security Council

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

Non-members Members

mean=0.26 mean=0.33

std dev.=0.44 std dev.=0.47

(n=7129) (n=477)

UN Security Council Membership Status

% o

f ob

s. p

artic

ipat

ing

in I

MF

pro

gram

s

Figure 3: Participation in IMF programsby UN Security Council Membership and Region

0.00

0.10

0.20

0.30

0.40

0.50

0.60

Non-member Member Non-member Member Non-member Member

n=1669 n=95 n=1254 n=100 n=1119 n=47

Africa LA & Carib. Asia & S. Pacific

UN Security Council Membership Status and Region

% o

f o

bs.

pa

rtic

ipa

ting

in I

MF

p

rog

ram

s

Figure 1: Participation in IMF programs by non-permanent UN Security Council Membership over time

0%

10%

20%

30%

40%

50%

Non-members

Members Other years 4 yearsbefore

3 yearsbefore

2 yearsbefore

1 year before 1st yearmember

2nd yearmember

1 year after 2 years after

mean=0.28 mean=0.34 mean=0.28 mean=0.28 mean=0.31 mean=0.33 mean=0.32 mean=0.35 mean=0.34 mean=0.30 mean=0.28

st.dev.=0.45 st.dev.=0.48 st.dev.=0.45 st.dev.=0.45 st.dev.=0.46 st.dev.=0.47 st.dev.=0.47 st.dev.=0.48 st.dev.=0.48 st.dev.=0.46 st.dev.=0.45

(n=6684) (n=462) (n=5405) (n=178) (n=196) (n=215) (n=236) (n=236) (n=225) (n=234) (n=221)

UN Security Council Membership Status

% o

f ob

s. p

arti

cipa

ting

in I

MF

pro

gram

s

The horizontal line shows the average IMF participation rate across our entire sample. The dots reflect the results where only low and lower-middle income countries are included.

Table 3: Controlling for Additional Predictors of IMF Participation

  Pooled LogitCountry Fixed

EffectsRegional Fixed

EffectsYear Fixed

EffectsTemporal Splines

UNSC 0.59** 0.83** 0.56** 0.51** 0.64**

(Robust std error) (0.24) (0.29) (0.26) (0.22) (0.29)

Foreign Reserves -0.15** -0.005 -0.13** -0.13** -0.04

(Robust std error) (0.03) (0.07) (0.03) (0.03) (0.08)

Debt Service 0.02** 0.02 0.03** 0.03** 0.02**

(Robust std error) (0.01) (0.01) (0.01) (0.01) (0.01)

Investment -0.06** -0.08* -0.05** -0.04** -0.05

(Robust std error) (0.01) (0.05) (0.01) (0.01) (0.04)

Past Participation 2.47** 2.42** 2.45** 2.27** 2.00*

(Robust std error) (0.26) (0.45) (0.27) (0.34) (1.13)

Lagged Election -0.02 -0.06 -0.07 -0.11 -0.11

(Robust std error) (0.16) (0.18) (0.16) (0.17) (0.21)

Budget Surplus 0.01 0.06** 0.01 -0.003 0.06**

(Robust std error) (0.02) (0.03) (0.02) (0.02) (0.03)

Inflation -0.0002** -0.0003 -0.0002* -0.0003** -0.0001

(Robust std error) (0.0001) (0.0002) (0.0001) (0.0001) (0.0002)

Current Account -0.01 -0.001 0.01 0.01 -0.002

(Robust std error) (0.01) (0.02) (0.01) (0.01) (0.02)

BOP -3.89* 0.19 -2.89 -2.09 0.05

(Robust std error) (2.07) (3.17) (2.09) (2.07) (3.22)

GDP/capita (1995 PPP) -0.00003 -0.001** -0.0001* -0.0001** -0.001**

(Robust std error) (0.00003) (0.0002) (0.00004) (0.00004) (0.0002)

Growth -0.001 -0.003 -0.003 -0.002 -0.004

(Robust std error) (0.005) (0.02) (0.004) (0.004) (0.02)

Regime 0.04 0.32 0.18 0.18 0.26

(Robust std error) (0.19) (0.39) (0.20) (0.18) (0.41)

log(checks) 0.08 0.13 0.16 0.07 0.06

(Robust std error) (0.14) (0.25) (0.14) (0.10) (0.24)

Average # of World Bank projects

0.0

0.5

1.0

1.5

2.0

2.5

avg=1.29

std=1.95

avg=2.13

std=2.93

avg=1.28 avg=1.30

std=1.96 std=1.93

avg=2.15 avg=2.10

std=2.96 std=2.92

avg=2.06 avg=2.19

std=2.75 std=3.11

n=176 n=181

Non-

n=5333 n=357

member Member

Total sample

avg=1.29

std=1.95

n=5333

Non-member

1st.yearmember

2nd yearmember

Over time

n=2638 n=183 n=2695 n=174

Non-member

Member Non-member

Member

During the cold war After the cold war

Observation by Russian Student

• Bribes – no surprise– Trade money for votes

• But the US bribes…– with a loan – must be repaid!

• Impressive!

Regional OrganizationsRegional Hegemons

Allocation of ADB lending by UNSC membership over time

Daniel Yew Mao Lim, Class of 2011

Going Multipolar?

• Political power & international institutions

• No one at the global level

• Politics go to regional level

Georgetown global impact

• Places I have taught classes:

• Places I have held a research affiliation:

• Places I have presented my research:

Conclusion

• Teaching

• Advising

• Research

– Informs our teaching

– Strengthens our global reputation

Thank youWE ARE GLOBAL GEORGETOWN!