Financialization and Government Borrowing Capacity in Emerging Markets (International Political Economy Series)

Hardie investigates the link between the financialization -- defined as the ability to trade risk -- and the capacity of emerging market governments to borrow from private markets. He considers the government bond markets in Brazil, Lebanon and Turkey and includes interviews with 126 financial market actors. How much can governments borrow? In practice, government debt levels vary markedly relative to the size of their economies. Some countries face a debt crisis, and, as a result, face the need to cut spending or raise taxes, at half the level of indebtedness of others. Hardie explains this difference by focusing on three emerging markets: Brazil, Lebanon and Turkey. He highlights the nature of the investor base as central to borrowing capacity. Based on interviews with 126 financial market actors, he considers financial markets in a detail rarely seen in political economy studies. Hardie argues that increased financialization decreases government borrowing capacity, and shows how increasing the ability of investors to trade risk -- increasing financialization -- decreases, rather than increases, the ability of emerging market governments to borrow on a sustainable basis 'Why are some governments able to borrow more than others? Iain Hardie highlights the importance of the structure of, and agents within, government bond markets. Contrary to conventional wisdom, he shows how 'financialized' government bond markets undermine governments' borrowing capacity in important ways. This convincing argument deserves to be read not just by all scholars of finance but also policymakers seeking greater autonomy from the discipline of financial markets.' - Eric Helleiner, University of Waterloo, Canada 'The Global Financial Crisis has once again brought to the fore the question of what constraints financial markets place on governments' capacity to borrow. In this meticulously researched book, Hardie shows that, contrary to conventional wisdom, it is domestic investors who are often the dominant players in the financial markets of developing economies.' - John Ravenhill, Australian National University, Australia 'Who holds the reins on governments' borrowing capacity? Hardie demonstrates that it is the composition of domestic investors, and how engaged they are with international markets, that matters. Hardie's book comes with a warning to emerging market countries: financialization costs you autonomy. This brilliant study is a must read for all scholars of the international political economy.' - Leonard Seabrooke, Copenhagen Business School, Denmark and University of Warwick , UK Front Matter....Pages i-xi Introduction....Pages 1-34 Domestic Commercial Banks....Pages 35-58 Domestic Individual Investors....Pages 59-74 Domestic Institutional Investors....Pages 75-105 International Investors....Pages 106-128 Conclusion....Pages 129-152 Back Matter....Pages 153-220