Development and Change最新文献

In the aftermath of the COVID-19 pandemic, much of the global South has been immersed in a debt crisis of a breadth and depth not seen since the early 1980s. The debt distress was apparent before the pandemic and the situation over the last decade is best described as a slow burn, which the pandemic and war in Ukraine ignited in often sudden and dramatic ways. However, what remains a surprising feature of the ongoing situation has been the avoidance so far of a generalized domino effect, unlike previous systemic Southern debt crises. This fact does not diminish the severity of the consequences given that the containment of crisis has been achieved by regular and persistent applications of austerity and adjustment programmes with deleterious impacts on development in poor countries. This article frames the Debate by exploring these aspects of the current Southern debt crisis, focusing on its deeper structural drivers versus the role of more proximate triggers of the crisis; the similarities or differences with past crises of recent decades; and the degree to which anything has in fact changed in orthodox responses to crisis management. A theme that emerges from the more heterodox scholarship profiled by this Debate is that the current crisis and its responses are maintaining the dominant development paradigm of the last 40 years, rather than eliciting a shift away from it. There is a continued adherence to neoliberal ideology in macroeconomic policy making and to the punitive subordination of developing countries in debt distress, through crisis responses, to the Northern and especially US-centred international financial system. Ignoring the very strong similarities to the past, especially the 1982 debt crisis that ushered in this paradigm, risks repeating the lost decades to development that followed.

Periods of dollar-led global monetary tightening generate negative effects in many lower- and middle-income countries. The tightening cycle which commenced in early 2022 has exacerbated the financial dislocation experienced by countries including Zambia, Sri Lanka and Pakistan. How can policy makers protect their economies from such external shocks and foster a stable developmental environment? Some recent contributions argue that the capacity of countries to insulate domestic policy from global financial conditions depends upon ‘monetary sovereignty’. This contribution argues that this misrepresents the constraints to macroeconomic policy and development strategy. Monetary sovereignty, if narrowly defined, is necessary but not sufficient for domestic policy autonomy. Stronger definitions impose unrealistic requirements on debt denomination and exchange rate regimes. The authors argue that, outside of currency unions, the main policy constraints for developing countries are limited domestic productive capacity and integration into global trade and financial networks rather than monetary arrangements. The discussion is illustrated with an empirical examination of three recent episodes of global illiquidity and/or policy tightening: the 2013 taper tantrum, the March 2020 liquidity shock and the 2022 dollar tightening cycle. The authors find evidence that monetary sovereignty does not insulate a country from episodes of dollar illiquidity. While ‘fundamentals’ such as current account deficits and foreign exchange reserves provide limited power in identifying vulnerability, measures of financial depth and activity do appear related to vulnerability.

This article examines the development and implications of local currency bond markets (LCBMs) in African countries in the context of international financial subordination (IFS). Despite the promotion of LCBMs as a solution to debt vulnerability, there is a dearth of research that offers a systematic empirical examination of their actual benefits along with conceptual explanations as to when and why such benefits may or may not materialize. This is especially true for countries at the bottom of the global economic hierarchy. To explore how the subordination in global production and financial systems shapes LCBM development, the article offers an empirical analysis of selected African countries that combines interviews with policy makers, officials and experts with statistical data. The findings suggest that while LCBMs offer some benefits, such as mitigating risks associated with foreign currency debt, their potential is limited by the structural processes created by IFS, such as their dependence on the global financial cycle, the relatively higher costs of this debt and the sustained constraint on macroeconomic policy making. However, there are also domestic factors which shape how these structural constraints are mediated in the context of LCBM development — in particular, historically developed financial structures of developing countries, the political economy of the state and the structure of production. This study thus contributes to the debate about the developmental benefits of domestic debt market development and the emerging research agenda on IFS.

Pakistan has received a total of 23 loan packages from the International Monetary Fund (IMF) between 1958 and 2023, and recurrent indebtedness has hindered structural transformation. Recent crises, such as the COVID-19 pandemic, surging commodity prices, Russia's invasion of Ukraine and diplomatic tensions between the United States and China, have exacerbated Pakistan's indebtedness. This debt has geopolitical importance given the rivalry between the US and China. Multilateral support for restructuring has been complicated by Pakistan's unique alliance with China through the China‒Pakistan Economic Corridor, pivotal to the Belt and Road Initiative. This analysis of Pakistan's debt crisis explores this complexity by considering the Pakistani government's attempts to resist the IMF, particularly between 2018 and 2022, when the potential of China as an alternative source of financial support looked increasingly viable. Unlike less critical political analyses on debt, which tend to be preoccupied with endogenous governance failures and fiscal profligacy, this article focuses on the external drivers of debt. In doing so, it highlights the role of a hostile international legal system, standard-setting arrangements, rating agencies and arbitrary charges that impose huge economic burdens and undermine financial stability, as well as the constraints embedded in the global investment and financial architecture that persistently limit Pakistan's policy space.

World Bank Group, World Development Report 2022: Finance for an Equitable Recovery. Washington, DC: World Bank Group, 2022. xix + 248 pp. www.worldbank/org/en/publication/wdr2022

As if the climate crisis was not enough, the world's economic system is now in a full-blown development crisis, with debt distress at its core. It threatens another ‘lost decade’, with economic insecurity, political instability and further erosion of democratic institutions for much of the world's population. The International Monetary Fund (IMF) projects the weakest global medium-term growth prospects in more than 30 years. Developing countries have amassed enormous debts dealing with the COVID-19 pandemic, and face high food and energy costs, exacerbated by a high US dollar. A slowing global economy, rising interest rates and depreciating currencies have come together to tip at least 60 countries into debt distress or close to it — more than twice as many as there were in 2015. The Institute of International Finance (IIF) estimates that total developing world debt rose to a record of US$ 98 trillion at the end of 2022.

Global debt relative to global output was already at unusually high levels before the pandemic. Moreover, global growth had slowed down in 2011‒21, compared to the previous decade. In the later period, 80 per cent of developed countries experienced slower growth than in 2000–10, as did 75 per cent of developing countries. Then came the exogenous event of the global COVID-19 shock which began in early 2020. As the World Bank's World Development Report 2022: Finance for an Equitable Recovery states, ‘The COVID-19 pandemic is possibly the largest shock to the global economy in over a century’ (p. 20). In 2020, the first year of the pandemic, the global economy shrank by 3 per cent; economic activity contracted in about 90 per cent of countries. This is a higher percentage of countries experiencing negative growth in per capita GDP than in any year since 1901, when the data started — a higher proportion even than during two World Wars, the Great Depression of the 1930s, the emerging markets debt crisis of the 1980s, and the 2007‒10 North Atlantic financial crisis.

Major economies administered the largest double dose of fiscal and monetary expansion in history, and major firms exploited the uncertainty of the pandemic to mark up their prices far above the cost of labour and non-labour inputs, making a combined demand- and sellers-inflation at the highest rate in decades. Central banks are now frantically trying to rein it in. Governments and private entities were forced to borrow even more than before in order to stay afloat as business activity ground to a halt; and they deferred payments on existing debt while borrowing more.

In 2020, the average total debt burden (both public and private) of low- and middle-income countries leapt by 9 percentage points, compared with an annual increase of 1.9 per cent in the

This article questions the validity of widely promulgated claims that Sri Lanka's debt crisis is the result of a combination of Chinese debt diplomacy and economic mismanagement in the form of fiscal and monetary excesses. The authors argue that if Sri Lanka has fallen into any kind of debt trap, it is an international sovereign bond debt trap. They further argue that the fundamental cause of the country's debt crisis is the failure of successive Sri Lankan administrations to transition towards an export-oriented manufacturing economy focused on producing increasingly technologically sophisticated manufactured products, and lay the blame for this failure on a combination of external and domestic forces operating in tandem with one another. Since the remedial action taken by the Sri Lankan government in the context of an extended fund facility arrangement with the International Monetary Fund is premised on the contention that the source of the crisis is the protracted fiscal and monetary excesses of successive Sri Lankan administrations, this action is unlikely to offer a permanent solution to Sri Lanka's debt problem — just as similar attempts to remedy previous debt and currency crises have failed.

Recent accounts of the re-emergence of debt distress in Africa, while offering significant insights, fail to provide the historical political-economic context within which African indebtedness is set. On the surface, spending induced by the COVID-19 pandemic, economic fallout from the Russia–Ukraine war, and repeated examples of fiscal indiscipline by African governments appear to be the causes of the current wave of debt crises. Beyond these factors, however, this article argues that the present indebtedness, like previous episodes, is rooted in the economic and financial subordination of African economies. Specifically, the article places Ghana's extensive debt within the country's post-independence political-economic context, and thus traces the structural factors and external constraints that underlie its economic vulnerability and financial dependence. These include the collapse of developmentalism in the 1970s, the Structural Adjustment Programmes of the 1980s, and an exploitative transnational lending system dominated by Western commercial creditors. Internally, recent fiscal mistakes by the government, within its limited policy space, have exacerbated Ghana's indebtedness. The Ghanaian experience shows that unconditional debt cancellation, widely called for, is a necessary but insufficient measure to address the recurring cycles of indebtedness. Debt cancellation should be followed by broader economic and financial reforms, globally and domestically.

In the period 2000–2019, Peru enjoyed sustained GDP growth and a long period of macroeconomic stability; as a result, poverty was reduced markedly in comparison to the 1980s and early 1990s, when the country faced severe recessions and hyperinflation. This positive economic performance coincided with the implementation of a mainstream macroeconomic framework which, alongside favourable external conditions, allowed for continuous external financing of current account deficits, mainly through foreign direct investment (FDI). Against the background of current debates regarding the resurgence of debt crises and the advocacy of FDI as a way to avoid such crises, this article uses balance of payments and international investment position statistics to assess whether Peru's acquired macroeconomic stability can be deemed sustainable. Drawing on the contributions of the Latin American structuralist school and more recent analyses that have raised concerns, the article shows that Peru's external position has taken on a Ponzi profile, casting doubt on the idea that FDI is a superior way of external financing compared to external debt. It concludes with a discussion of the social and environmental implications of Peru's widely praised macroeconomic framework, highlighting the limits that peripheral economies face when their growth relies excessively on external financing.