Sujeong Shim was in elementary school when she saw life all around her change. Her home country South Korea was in a financial crisis. She could tell that everything was suddenly different: frustration, fear, and even anger were in the air.
That experience led the NYUAD Assistant Professor of Political Science to write a book that’s been 20 years in the making. The research is about the International Monetary Fund and has the potential to alter how the international body approaches providing financial assistance to countries that need it.
“Everyone was talking about the IMF,” Shim described her first impressions of the international body as an eight-year old. “I didn’t know what the IMF was. I kind of thought, ‘Wow, they are evil, they came into my country and made all this mess.’ Since then, I have been fascinated by the political economy of international finance.”
In her book, Shim examines why the IMF programs succeed or fail. Shim’s research found that if the government of an IMF-assisted country has strong public support, the IMF will provide lenient programs with large loans and fewer conditions. More importantly, international investors will react favorably by resuming their lending to the government. But if a government struggles politically, Shim found investors expect the country won’t be able to implement reforms, because it lacks public support necessary to achieve them. Consequently, those governments tend to get small IMF loans with more conditions, and international investors tend not to lend them money. The lack of private financing makes it difficult for governments to overcome financial crises.
“Government popularity is something we tend not to focus on when we discuss international finance,” Shim said.
The big takeaway from the book is that public opinion matters. What IMF officials have to consider when they design a program is not only whether every condition is going to fix the economy, but whether the government has the political capacity to implement these reforms. And if the government doesn't, maybe the first step is to give them a chance to recover public support and help them do so.
While working on her book, Shim discovered she had more questions about the IMF. She’s exploring those in additional papers she’s writing. Shim is interested in how the governments describe the IMF, whether they blame or defend it, and what influences that feedback. She has collected about 800 government statements on the IMF from countries under IMF programs. Shim is also researching what impact those different narratives have on investors.
Shim is not only focused on the IMF, she’s also looking at how the US Federal Reserve can be a tool for the US government to reward allies or punish enemies. Additionally, Shim is researching how countries decide on exit terms for bilateral investment treaties since states continue to pull out of those or threaten to do so.
Shim says she can do a tremendous amount of research because of NYU Abu Dhabi’s support, one of the reasons she chose to come to the University less than a year ago.
“My colleagues in the political science program are excellent researchers,” Shim said. “We can engage in intellectual conversation, we can talk about methods, implications, or everything about research.”
Excellent students were also another draw.
“They are all excellent, probably the smartest students I've ever seen,” Shim said. “They are the best students in their countries. And they bring in all the interesting and unique examples from their home countries, enriching the class discussion.”
