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Why do some governments borrow from China, while others borrow from the United States or the International Monetary Fund (IMF)? This book systematically explains how governments choose among competing loan offers. As the strings attached to loans vary across creditors, domestic interest groups prefer one type of creditor to the other. However, interest groups disagree about which creditor is preferable. Governments cater to whichever domestic interest group
coalition is dominant by borrowing from the coalition's preferred creditor. The book offers evidence from Ecuador, Peru, and Colombia as well as an extensive statistical analysis. The results show that borrowing portfolios around the world reflect the relative strength of societal interest
groups.
About the author
Jonas B. Bunte is Assistant Professor of Political Economy at the University of Texas at Dallas. He studies the politics of finance and development. His work has appeared in the British Journal of Political Science, International Studies Quarterly, Journal of Peace Research, World Development, Review of International Political Economy, and elsewhere. He received his PhD in Political Science from the University of Minnesota.
Summary
Credit is the lifeblood of capitalism and development. Brazil, Russia, India, and China-also called BRICs-have become important creditors to developing countries. However, how will their loans affect economic development and democracy in recipient countries? We need to understand why governments accept Chinese over Western loan offers before we can predict their likely consequences. In Raise the Debt, Jonas B. Bunte systematically explains how governments choose among competing loan offers. Using statistical analyses and extensive interview data, he shows that the strings attached to loans vary across creditors. Consequently, one domestic interest group may benefit from Chinese credit but not U.S. loans, while the opposite is the case for other groups. Bunte provides evidence that governments cater to whichever domestic interest group is politically dominant when deciding between competing loan offers. Combining a comparative politics approach with international political economy methods, Raise the Debt shows how a deeper understanding of governments' borrowing decisions is critical for gaining insights into how these loans could impact growth and democracy on a global scale.
Additional text
Bunte's path-breaking book will reshape the way that scholars think about the choices the governments have when seeking international finance. The book provides an analytical framework to think about why some governments turn to China and other BRICS lenders as opposed to private capital markets, institutions such as the IMF and World Bank, or traditional foreign aid donors like the United States. Bunte argues that domestic politics drive the choices that governments make when seeking international financial support. The book will thus be of interest for scholars of international political economy, and it has implications for security studies of emerging market powers. Because the book's argument relies heavily on domestic politics, it will also be important for scholars of comparative politics. In short, the book is a must-read for political scientists." -James Raymond Vreeland, Professor of Politics and International Affairs, Princeton University
