Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Do IMF and World Bank Influence Voting in the UN General Assembly? Axel Dreher and Jan-Egbert Sturm International Political Economy Society Inaugural Conference November 17-18, 2006

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Is voting in the UN General Assembly important?  US Department of State (1985, Report to Congress) : Examining UN votes makes it possible “to make judgments about whose values and views are harmonious with our own, whose values are consistently opposed to ours, and whose practices fall in between”  Secretary of State letters of instruction to new US ambassadors (quoted in Andersen et al., 2004) : “A country’s behavior at the UN is always relevant to its bilateral relationship with the United States”

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Literature overview G7UN Voting IMF / WB a b d c

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Hypotheses 1. Cultural and political proximity increases voting coincidence 2. Countries depending on foreign support are more likely to vote in line with G7 countries 3. (  ) Bilateral foreign aid increases the probability that a recipient country votes in line with the donor 4. Trade flows increase/decrease the probability that a country votes in line with its partner country (  ) IMF and World Bank loans increase the probability that a recipient country votes in line with the institutions’ major shareholders

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Main Hypothesis  (  ) IMF and World Bank loans increase the probability that a recipient country votes in line with the institutions’ major shareholders  IBRD: International Bank for Reconstruction and Development  IDA: International Development Association IMFWorld Bank Concessional - net flows - amount agreed net flows (IDA) Non-concessional - net flows - amount agreed net flows (IBRD)

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Main Hypothesis  (  ) IMF and World Bank loans increase the probability that a recipient country votes in line with the institutions’ major shareholders  World Bank  Number of technical loans programs starting  Number of adjustment programs starting  Number of other programs starting  IMF  Start of EFF and SBA program (non-conc.)  Start of SAF and PRGF program (conc.)

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Data  Years:  Recipient-countries:up to 188  Donor-countries:each individual G7 country & weighted-average G7

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Comparing inline voting behavior across donor countries,  Variables corrected for country- and year-specific effects  Each cell based on ca. 5,000 country/year observations CANFRAGBRDEUITAJPNUSA Canada (CAN) France (FRA) UK (GBR) Germany (DEU) Italy (ITA)0.96 Japan (JPN) United States (USA) G

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Voting coincidence across different regions  Regional classification based on CIA World Fact Book CANDEUFRAGBRITAJPNUSA G7 Rest of the world

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Extreme Bounds Analysis  Estimate equation of the following form Y it =  M it +  F it +  Z it + u it  Re-specify Z-vector holding M and F constant  Go through all combinations of the Z vector  Examine all estimated  coefficients  Levine and Renelt (1992):look at extremes  Sala-i-Martin (1997):look at distribution  How to specify baseline model (M-vector)?  General-to-specific methodology (Temple, 2000)

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Results for baseline model  Voting coincidence increases when  cultural and political proximity increases (hypothesis 1)  dependence upon foreign support increases (hypothesis 2)

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Testing the main hypothesis for the G7 IMF World Bank conc. flows0.094 IDA flows (conc.) (0.92)(-1.39) conc. flows agreed (-0.28) non-conc. flows0.197 IBRD flows (non-conc.) (2.38)(4.75) non-conc. flows agreed0.208 (3.41) SAF & PRGF (conc.)0.002 (0.59) EFF & SBA (non-conc.)0.012 (4.75) techn. projects0.004 (2.04) adjust. projects0.005 (3.22) other projects0.001 (2.28)

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Testing the main hypothesis for the USA IMF World Bank conc. flows0.045 IDA flows (conc.) (0.36)(3.25) conc. flows agreed0.011 (0.23) non-conc. flows0.152 IBRD flows (non-conc.) (1.49)(3.90) non-conc. flows agreed0.133 (1.80) SAF & PRGF (conc.)0.005techn. projects0.003 (0.88)(1.05) EFF & SBA (non-conc.)0.006adjust. projects0.003 (1.79)(1.39) other projects0.001 (1.73)

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research CDF(0) Results of EBA CANFRAGBRDEUITAJPNUSAG7 Baseline variables (4,525 regressions per cell) National capability Democracy [-1]

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Testing the extended models CANFRAGBRDEUITAJPNUSAG7 p-value Hausman test Adj. R 2 #Obs #Cnt Period IMF EFF & SBA IBRD flows WB adjust. projects (4.28)(3.67)(3.54)(3.30)(4.17)(2.89)(1.51)(3.29) (3.94)(3.91)(4.02)(3.81)(4.09)(3.69)(3.49)(4.33) (2.46)(3.34)(3.10)(1.97)(2.72)(1.17)(1.53)(3.03) USA (3.90)

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Robust to changes in dependent variable?  How to define voting coincidence?  Barro & Lee= BothYes + BothNo + Abs.  Thacker:= BothYes + BothNo + ½ Abs.  Kegley & Hoock:= BothYes + BothNo  Which votes to count?  Also almost unanimous votes?  All votes or only Keyvotes?  Include “dominant” topics? (Israel: 20% of all votes)  How to weigh the past?  No weights, or slowly decaying weights

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Conclusions Hypotheses 1 to 4 The probability that a recipient country votes in line with the donor … 1. significantly increases with cultural proximity 2. significantly increases with dependency on foreign support 3. is not significantly related to bilateral foreign aid 4. is somewhat related to bilateral trade flows

Prof. Dr. Jan-Egbert Sturm / Konjunkturforschungsstelle Swiss Institute for Business Cycle Research Conclusions Main Hypothesis  Concessional loans are not correlated with voting coincidence in the UN General Assembly  Non-concessional IMF and World Bank programs and loans matter for voting in the UN General Assembly  number of IMF EFF and SBA programs  flow of World Bank IBRD loans  Also the start of World Bank adjustment programs matter  For the US, only IBRD loans matter for the voting behavior of recipient countries