Pub Date : 2019-03-28DOI: 10.1093/OSO/9780190866167.003.0001
Jonas B. Bunte
This chapter illustrates that borrowing patterns differ significantly across developing countries, even if they have the same credit rating, income level, and degree of democracy. Some rely on private creditors, others on multilateral institutions; some use loans from Western governments like the United States, while others borrow from emerging creditor governments such as China. These empirical patterns suggest that it is not only creditors who determine loan allocations, but that recipient governments have preferences and act upon them. This book argues that governments choose their creditors to satisfy the demands by the dominant societal interest groups. These groups prefer one type of creditor to others because the conditions attached to the monetary transfers imply positive (or negative) distributional consequences for the groups. The chapter concludes with a preview of the qualitative and quantitative evidence presented later in the book.
{"title":"Explaining Variation in Borrowing Portfolios","authors":"Jonas B. Bunte","doi":"10.1093/OSO/9780190866167.003.0001","DOIUrl":"https://doi.org/10.1093/OSO/9780190866167.003.0001","url":null,"abstract":"This chapter illustrates that borrowing patterns differ significantly across developing countries, even if they have the same credit rating, income level, and degree of democracy. Some rely on private creditors, others on multilateral institutions; some use loans from Western governments like the United States, while others borrow from emerging creditor governments such as China. These empirical patterns suggest that it is not only creditors who determine loan allocations, but that recipient governments have preferences and act upon them. This book argues that governments choose their creditors to satisfy the demands by the dominant societal interest groups. These groups prefer one type of creditor to others because the conditions attached to the monetary transfers imply positive (or negative) distributional consequences for the groups. The chapter concludes with a preview of the qualitative and quantitative evidence presented later in the book.","PeriodicalId":379488,"journal":{"name":"Raise the Debt","volume":"147 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123830778","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-28DOI: 10.1093/OSO/9780190866167.003.0002
Jonas B. Bunte
This chapter introduces a demand-side theory to explain how governments choose their creditors. Labor, Industry, and Finance are important interest groups in recipient countries. Their governments can borrow from four types of creditors: Western governments, BRIC governments, multilateral institutions, and private creditors. These creditors may offer the same loan amount, but the strings attached to their loans differ. Therefore, the expected distributional consequences of a particular loan differ across domestic interest groups. Policymakers try to satisfy the two most influential groups simultaneously by borrowing from the creditor that is jointly preferred by both groups. A government will rely on loans from BRICs if a Corporatist Coalition between Labor and Industry dominates the political landscape. In contrast, governments will tend to borrow from private creditors if a Capital Coalition between Finance and Industry predominates, but will obtain loans by Western governments if faced with a Consumer Coalition between Labor and Finance.
{"title":"How Governments Choose Their Creditors","authors":"Jonas B. Bunte","doi":"10.1093/OSO/9780190866167.003.0002","DOIUrl":"https://doi.org/10.1093/OSO/9780190866167.003.0002","url":null,"abstract":"This chapter introduces a demand-side theory to explain how governments choose their creditors. Labor, Industry, and Finance are important interest groups in recipient countries. Their governments can borrow from four types of creditors: Western governments, BRIC governments, multilateral institutions, and private creditors. These creditors may offer the same loan amount, but the strings attached to their loans differ. Therefore, the expected distributional consequences of a particular loan differ across domestic interest groups. Policymakers try to satisfy the two most influential groups simultaneously by borrowing from the creditor that is jointly preferred by both groups. A government will rely on loans from BRICs if a Corporatist Coalition between Labor and Industry dominates the political landscape. In contrast, governments will tend to borrow from private creditors if a Capital Coalition between Finance and Industry predominates, but will obtain loans by Western governments if faced with a Consumer Coalition between Labor and Finance.","PeriodicalId":379488,"journal":{"name":"Raise the Debt","volume":"492 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122898576","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-28DOI: 10.1093/OSO/9780190866167.003.0010
Jonas B. Bunte
This chapter evaluates alternative explanations for differences in borrowing portfolios across developing countries. The analysis suggests that borrowing portfolios result from the interaction of supply- and demand-side factors, through their relative importance differs across creditors. Loans from private creditors are more heavily shaped by creditors’ preferences, while recipient preferences strongly affect borrowing from public creditors. The analysis finds no evidence that recognizing Taiwan negatively affects the loan volume obtained from China. Recipient governments do not appear to decide among creditors based on the interest rate of loans offered. Borrowing portfolios do not depend on the use to which the loan is put as differences in borrowing portfolios across coalitions remain irrespective of infrastructure needs, humanitarian emergencies, and debt crises. This suggests that recipients do not use particular creditors for specific projects. Lastly, domestic political considerations appear more important in determining governments’ borrowing decisions than their ideological alignment with creditor governments.
{"title":"Evaluating Alternative Explanations","authors":"Jonas B. Bunte","doi":"10.1093/OSO/9780190866167.003.0010","DOIUrl":"https://doi.org/10.1093/OSO/9780190866167.003.0010","url":null,"abstract":"This chapter evaluates alternative explanations for differences in borrowing portfolios across developing countries. The analysis suggests that borrowing portfolios result from the interaction of supply- and demand-side factors, through their relative importance differs across creditors. Loans from private creditors are more heavily shaped by creditors’ preferences, while recipient preferences strongly affect borrowing from public creditors. The analysis finds no evidence that recognizing Taiwan negatively affects the loan volume obtained from China. Recipient governments do not appear to decide among creditors based on the interest rate of loans offered. Borrowing portfolios do not depend on the use to which the loan is put as differences in borrowing portfolios across coalitions remain irrespective of infrastructure needs, humanitarian emergencies, and debt crises. This suggests that recipients do not use particular creditors for specific projects. Lastly, domestic political considerations appear more important in determining governments’ borrowing decisions than their ideological alignment with creditor governments.","PeriodicalId":379488,"journal":{"name":"Raise the Debt","volume":"83 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134141571","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-28DOI: 10.1093/OSO/9780190866167.003.0008
Jonas B. Bunte
This chapter describes how data for the statistical analysis were obtained. First, the dependent variable captures countries’ borrowing portfolios, that is, the share of loans obtained from a particular type of creditor. The main difficulty lies in obtaining reliable data on loan inflows from emerging creditors, such as China. In contrast to existing approaches focused on loan outflows from China, this book instead collects information on the loan inflows as recorded in the budgets of recipient countries. Second, the key independent variable is the type of societal coalition. The relative political strength of Labor, Industry, and Finance determines which type of coalition is present. However, their relative political influence cannot be observed directly. The chapter describes how proxies were derived by combining information about the groups’ ability to overcome collective action problems with their importance to the domestic economy.
{"title":"Measuring Borrowing Portfolios and Group Strength","authors":"Jonas B. Bunte","doi":"10.1093/OSO/9780190866167.003.0008","DOIUrl":"https://doi.org/10.1093/OSO/9780190866167.003.0008","url":null,"abstract":"This chapter describes how data for the statistical analysis were obtained. First, the dependent variable captures countries’ borrowing portfolios, that is, the share of loans obtained from a particular type of creditor. The main difficulty lies in obtaining reliable data on loan inflows from emerging creditors, such as China. In contrast to existing approaches focused on loan outflows from China, this book instead collects information on the loan inflows as recorded in the budgets of recipient countries. Second, the key independent variable is the type of societal coalition. The relative political strength of Labor, Industry, and Finance determines which type of coalition is present. However, their relative political influence cannot be observed directly. The chapter describes how proxies were derived by combining information about the groups’ ability to overcome collective action problems with their importance to the domestic economy.","PeriodicalId":379488,"journal":{"name":"Raise the Debt","volume":"2004 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128732577","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-28DOI: 10.1093/OSO/9780190866167.003.0011
Jonas B. Bunte
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.
{"title":"Why Greater Choice Matters for Developing Countries","authors":"Jonas B. Bunte","doi":"10.1093/OSO/9780190866167.003.0011","DOIUrl":"https://doi.org/10.1093/OSO/9780190866167.003.0011","url":null,"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.","PeriodicalId":379488,"journal":{"name":"Raise the Debt","volume":"74 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132437848","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-28DOI: 10.1093/OSO/9780190866167.003.0003
Jonas B. Bunte
The theory proposed in this book makes several assumptions about actors’ preferences and the process by which borrowing decisions are made. Qualitative evidence is needed to assess the accuracy of these assumptions. This chapter introduces the rationale for the case selection: identify three countries that are as similar as possible in many dimensions (history, geography, culture, economic and political system, etc.) but represent the variation in the key independent variable as proposed by theory. Ecuador was chosen as a representative of a Corporatist Coalition between Labor and Industry, Colombia stands for a Capital Coalition between Finance and Industry, while Peru represents a Consumer Coalition between Labor and Finance. The chapter also offers details on the qualitative methodology, such as recruitment process and interview method.
{"title":"Tracing the Process of Borrowing with Fieldwork","authors":"Jonas B. Bunte","doi":"10.1093/OSO/9780190866167.003.0003","DOIUrl":"https://doi.org/10.1093/OSO/9780190866167.003.0003","url":null,"abstract":"The theory proposed in this book makes several assumptions about actors’ preferences and the process by which borrowing decisions are made. Qualitative evidence is needed to assess the accuracy of these assumptions. This chapter introduces the rationale for the case selection: identify three countries that are as similar as possible in many dimensions (history, geography, culture, economic and political system, etc.) but represent the variation in the key independent variable as proposed by theory. Ecuador was chosen as a representative of a Corporatist Coalition between Labor and Industry, Colombia stands for a Capital Coalition between Finance and Industry, while Peru represents a Consumer Coalition between Labor and Finance. The chapter also offers details on the qualitative methodology, such as recruitment process and interview method.","PeriodicalId":379488,"journal":{"name":"Raise the Debt","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129034457","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-28DOI: 10.1093/OSO/9780190866167.003.0009
Jonas B. Bunte
Societal coalition shape governments’ borrowing decisions across the developing world. The analyses use a compositional data model to estimate the effect of societal coalitions on the share of loans obtained from four types of creditors. The results indicate that borrowing portfolios differ significantly across coalitions: Corporatist Coalitions rely primarily on BRIC loans, Capital Coalitions on private creditors, Consumer Coalitions on bilateral loans from Western governments. These differences remain significant after controlling for economic factors (recipient GDP, current account, existing debt levels, trade, and natural resources) and political considerations (democracies versus autocracies, type of electoral system, or government ideology). Furthermore, the results are robust to analyzing China separately from Brazil, India, and Russia, as well as when combining Western bilateral with multilateral loans. The evidence strongly supports the argument that developing countries make choices among competing loan offers.
{"title":"Governments’ Borrowing Decisions across the Developing World","authors":"Jonas B. Bunte","doi":"10.1093/OSO/9780190866167.003.0009","DOIUrl":"https://doi.org/10.1093/OSO/9780190866167.003.0009","url":null,"abstract":"Societal coalition shape governments’ borrowing decisions across the developing world. The analyses use a compositional data model to estimate the effect of societal coalitions on the share of loans obtained from four types of creditors. The results indicate that borrowing portfolios differ significantly across coalitions: Corporatist Coalitions rely primarily on BRIC loans, Capital Coalitions on private creditors, Consumer Coalitions on bilateral loans from Western governments. These differences remain significant after controlling for economic factors (recipient GDP, current account, existing debt levels, trade, and natural resources) and political considerations (democracies versus autocracies, type of electoral system, or government ideology). Furthermore, the results are robust to analyzing China separately from Brazil, India, and Russia, as well as when combining Western bilateral with multilateral loans. The evidence strongly supports the argument that developing countries make choices among competing loan offers.","PeriodicalId":379488,"journal":{"name":"Raise the Debt","volume":"64 5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131194474","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-03-28DOI: 10.1093/OSO/9780190866167.003.0007
Jonas B. Bunte
Qualitative evidence is useful in tracing the process by which borrowing decisions are made. However, the question is how generalizable the findings from Ecuador, Colombia, and Peru are to other developing countries. Statistical analyses can provide insights into whether domestic political dynamics within recipient countries affect borrowing portfolios across developing countries. This chapter describes three challenges that need to be resolved before such analyses are possible: First, data on incoming loans must be obtained, which is particularly difficult for Chinese loans. Second, estimating the political strength of societal interest groups is challenging, as it cannot be observed directly. Third, analyzing a compositional variable (i.e., the loan shares of four creditors that must add up to 100%) presents a methodological challenge: increasing the share of loans obtained from one type of creditor must be matched by a corresponding decrease in the share of loans obtained from other creditors.
{"title":"Generalizing the Findings with Statistical Analyses","authors":"Jonas B. Bunte","doi":"10.1093/OSO/9780190866167.003.0007","DOIUrl":"https://doi.org/10.1093/OSO/9780190866167.003.0007","url":null,"abstract":"Qualitative evidence is useful in tracing the process by which borrowing decisions are made. However, the question is how generalizable the findings from Ecuador, Colombia, and Peru are to other developing countries. Statistical analyses can provide insights into whether domestic political dynamics within recipient countries affect borrowing portfolios across developing countries. This chapter describes three challenges that need to be resolved before such analyses are possible: First, data on incoming loans must be obtained, which is particularly difficult for Chinese loans. Second, estimating the political strength of societal interest groups is challenging, as it cannot be observed directly. Third, analyzing a compositional variable (i.e., the loan shares of four creditors that must add up to 100%) presents a methodological challenge: increasing the share of loans obtained from one type of creditor must be matched by a corresponding decrease in the share of loans obtained from other creditors.","PeriodicalId":379488,"journal":{"name":"Raise the Debt","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-03-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132363055","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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