Why Greater Choice Matters for Developing Countries

Abstract

This chapter reviews the findings from the qualitative and quantitative analyses and discusses key implications. The results provide insights into the competition between traditional and emerging creditors. It is unlikely that BRIC lenders will change their loan conditions match to those of Western creditors. Similarly, multilateral creditors are unlikely to abandon economic conditions as part of their loan offers just to make their loans more attractive. As a result, the theory predicts that the clientele of lenders will become more polarized across creditors and more homogenous for each individual creditor. At the same time, the findings suggest that the emergence of new creditors has increased the room to maneuver for developing countries. With respect to economic development, this means greater autonomy to choose between a neoliberal approach and a state-led industrialization model akin to that of the East Asian Tigers. With respect to democracy, the findings could imply that Chinese loans might actually promote democracy.