Effect if IMF Programmes on Foreign Direct Investment in Central and Southeastern Europe

This paper investigates whether participation in IMF programmes is a positive catalyst for FDI investors in Central and Southeastern Europe, differentiating between 3 types of IMF arrangements. We use time-series cross-section data for 17 countries in the region between 1990 and 2013. The research employs treatment effect model to address endogeneity bias, as participation in IMF arrangements is not a random event. We find evidence that only under those circumstances (i.e. under those types of arrangements) where countries can more credibly commit to required reforms and where IMF can influence them more strongly to do it, catalytic effect is positive.