Question: Whether and to what extent IMF lending programs have negative effects on the economies of borrowing states is a contentious issue. In the early days
Whether and to what extent IMF lending programs have negative effects on the economies of borrowing states is a contentious issue. In the early days of research in this topic, scholars compared economic outcomes from countries under IMF programs to those from countries not under IMF programs. For our purposes, let us consider the effects of Fund lending programs on foreign direct investment. Using the Latin America capital flows data for Assignment 4 (lat_am_cap_flows_example_MR.sav), compute a difference of means t-test on foreign direct investment as a percentage of GNP using the dichotomous independent variable selected, which indicates whether or not countries are under an IMF program in that year. Using these findings, what can we say here? Is it the case that IMF programs attract foreign direct investment, or do IMF programs deter it? Is such an analysis persuasive? Why or why not?
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