Michael P. Costeloe. Bonds and Bondholders: British Investors and Mexico's Foreign Debt, 1824–1888. Westport, Conn.: Praeger; dist. By Greenwood Publishing Group. 2003. Pp. xxii, 359. $69.95. ISBN 0-275-97939-3.

2004 ◽  
Vol 36 (2) ◽  
pp. 320-322
Author(s):  
George F. W. Young
Keyword(s):  
Foreign Debt ◽  
Publishing Group

Capital Flows to Developing Countries: Blessing or Curse? (Distinguished Lecture)

1998 ◽  
Vol 37 (4I) ◽  
pp. 125-151 ◽  
Author(s):  
Mohsin S. Khan
Keyword(s):  
Developing Countries ◽  
Capital Flows ◽  
Financial Integration ◽  
Foreign Capital ◽  
Foreign Debt ◽  
Capital Inflows ◽  
Private Capital ◽  
Policy Responses ◽  
Private Capital Flows ◽  
Significant Phenomenon

The surge of private capital flows to developing countries that occurred in the 1990s has been the most significant phenomenon of the decade for these countries. By the middle of the decade many developing countries in Asia and Latin America were awash with private foreign capital. In contrast to earlier periods when the scarcity of foreign capital dominated economic policy-making in these countries, the issue now for governments was how to manage the largescale capital inflows to generate higher rates ofinvestrnent and growth. While a number of developing countries were able to benefit substantially from the private foreign financing that globalisation made available to them, it also became apparent that capital inflows were not a complete blessing and could even turn out to be a curse. Indeed, in some countries capital inflows led to rapid monetary expansion, inflationary pressures, real exchange rate appreciation, fmancial sector difficulties, widening current account deficits, and a rapid build-up of foreign debt. In addition, as the experience of Mexico in 1994 and the Asian crisis of 1997-98 demonstrated, financial integration and globalisation can cut both ways. Private capital flows are volatile and eventually there can be a large reversal of capital because of changes in expected asset returns, investor herding behaviour, and contagion effects. Such reversals can lead to recessions and serious problems for financial systems. This paper examines the characteristics, causes and consequences of capital flows to developing countries in the 1990s. It also highlights the appropriate policy responses for governments facing such inflows, specifically to prevent overheating of the economy, and to limit the vulnerability to reversals of capital flows.

Sanctions and incentives to repudiate external debt

2021 ◽  
pp. 095162982098485
Author(s):  
Carlo de Bassa ◽  
Edoardo Grillo ◽  
Francesco Passarelli
Keyword(s):  
Foreign Debt ◽  
External Debt ◽  
Political Support ◽  
Fiscal Capacity ◽  
Foreign Countries ◽  
Political Turmoil ◽  
Target Country

Often foreign countries levy sanctions in the attempt to foment discontent with a hostile government. But sanctions may provoke costly reactions by the leaders of the target country. This paper presents a model in which sanctions exhaust the target country economically and impair its government’s fiscal capacity. Then, an office-motivated leader may find it convenient to default on foreign debt in order to free resources that she can invest to regain internal political support. The default thus becomes a defensive tool to partially dampen the internal political turmoil sanctions generate.

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