IMF surveillance as a signal to attract foreign investment |
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| Authors: | Wolfgang Mayer Alexandros Mourmouras |
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| Institution: | 1. Medical Law Research Center, School of Law, Fudan University, No.2005 Songhu Rd., Shanghai, China;2. Department of Health Economic, Public Health College, Harbin Medical University of China, No.194 Xuefu Road Nangang District, Harbin City, Heilongjiang Province, China;3. Department of Laboratory Medicine, The Third Affiliated Hospital of Harbin Medical University of China, No.194 Xuefu Road Nangang District, Harbin City, Heilongjiang Province, China;4. Department of Blood Transfusion, The Second Affiliated Hospital of Harbin Medical University; No.194 Xuefu Road Nangang District, Harbin City, Heilongjiang Province, China |
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| Abstract: | Poor governance and endemic corruption hamper the efforts of some developing countries to attract foreign investment. Incentive schemes based on verifiable signals of varying costs and quality can be helpful in encouraging their governments to intensify corruption-control efforts. This paper ranks alternative signals, including surveillance by the IMF and other IFIs (International Financial Institutions), as catalysts for private foreign investments. We demonstrate that the ranking crucially depends on the bargaining strength of governments relative to foreign investors. If foreign lenders control the bargain, IFI signals are the first choice. If governments are in control, IFI signals become the choice of last resort. |
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