Bargain Down or Shop Around? Outside Options and IMF Conditionality∗ Richard Clarky June 23, 2020 Abstract When do overlapping international organizations (IOs) serve as credible outside options to one another? Utilizing an original dataset on cooperation among IOs in the emergency lending space, I find that exit options are only credible when IOs compete as opposed to cooperate with one another. While the literature frames the International Monetary Fund (IMF) as a monopoly organization, I show that it increasingly competes with Regional Financing Arrangements (RFAs). When RFAs compete with the IMF, they become credible forum shopping destinations that member states can leverage in negotiations over conditional lending at the Fund. I first offer original descriptive analysis of patterns of cooperation among these IOs. I then hypothesize that as states become members of competitive IOs, but not cooperative institutions, they ought to receive less intrusive conditionality from the IMF. A series of regressions lend support for my theory, as do supplemental interviews and text analysis. Keywords: outside options, forum shopping, international organizations, IMF, condi- tionality Word Count: 10,808 ∗I thank Allison Carnegie, Don Casler, Lindsay Dolan, Nikhar Gaikwad, Randall Henning, Felicity Vabulas, and Noah Zucker for helpful comments on previous drafts. Participants at the Barcelona Workshop on Global Governance and several workshops at Columbia University also provided valuable feedback. All remaining errors are my own. yRichard Clark (Email:
[email protected]) is a Ph.D. Candidate, Department of Political Science, Columbia University, New York, NY. In April 2013, the International Monetary Fund (IMF) and Tunisia agreed to a two- year, $1.75 billion Stand-By Arrangement (SBA).1 Disbursement began in June 2013, with Tunisia taking on 20 loan conditions mandating various economic and institutional reforms.