Book project: The financial statecraft of debtors –  African governments and external finance

Can developing countries’ debt ever be a basis for independence rather than dependence?  Conventionally, developing countries are thought to be at the mercy of international financial markets and dependent on international financial institutions for access to development finance. When can developing countries’ borrowing instead be a source of strength?

Over the last two decades, China has become one of the leading lenders in sub-Saharan Africa.  Debates about China’s new role on the continent have focused on China’s motivations and the consequences for Western countries.  These discussions have at times overlooked the consequences for the African governments at the receiving end of Chinese finance.  Further, they have ignored the broader context of diverse external finance newly available to African governments, including private market finance.

In this book, I argue that an unparalleled diversity of lenders has allowed some African governments to turn borrowing into the basis for greater control over external affairs. Reducing their reliance on traditional donors, including the World Bank, the EU, and leading Western donors, gave borrowing governments greater leverage in negotiations with these traditional donors.  As a consequence, governments received more funding for priority projects, discretion over contentious policies, and flexibility of financing.

I support my argument using cross-national data on Chinese development finance and data I collected on African sovereign bonds, as well as a detailed comparison of three countries that borrowed from China and in international bond markets in the last two decades: Ethiopia, Ghana, and Kenya.


The following paper is part of this research agenda:

Emulate or Differentiate? Chinese development finance, competition, and World Bank infrastructure funding. The Review of International Organizations.

Foreign aid relationships are valuable to donors as a means of improving development outcomes and influencing recipient country policy. The emergence of new donors can lead to competition as donors vie for influence over recipient government policy and attention. How does such competition affect the behavior of traditional donors? I draw attention to how the rise of China as a provider of development finance is changing the type of development that traditional donors support. Chinese development finance is particularly targeted at large infrastructure projects, and this focus can exert pressure on traditional donors. I suggest traditional donors can either emulate China’s approach to development, i.e. offer projects in infrastructure-intensive sectors, or differentiate themselves and specialize in alternative approaches to development, e.g. focus on governance and social sector interventions. I test this using data on the terms of World Bank and Chinese development finance in over 100 countries. I find the World Bank responds to competitive pressure from China by emulating the Chinese emphasis on infrastructure, allocating a greater share of its development projects in infrastructure-intensive sectors in the year after recipient countries receive more Chinese development finance. Furthermore, subnational data shows that the World Bank also emulates China’s approach to development in response to competition at the regional level.China’s growing role as a provider of development finance affects traditional donor behavior, shaping the type of development donors support by introducing bottom-up competitiv e pressure.

Cross-border banking, regulation, and developing countries

Why do countries converge on global standards? How does domestic political economy shape the applicability of international rules on banking? Do banks follow migrants? I have a series of papers explaining the spread and adoption of international banking regulation, especially in developing countries, as well as the determinants of the cross-border banking.

Regulatory convergence in the financial periphery: How interdependence shapes regulators’ decisions. Volume 63, Issue 4, December 2019, Pages 908-922. With Emily Jones. International Studies Quarterly. 

We examine the processes through which regulatory norms and rules that prevail in the core of the global economy spread to countries in the periphery, focusing on Basel II banking standards. There has been no concerted campaign by standard-setting countries or international organizations to promulgate Basel II standards to countries in the financial periphery, yet they have spread nonetheless. We attribute this spread to the strong incentives generated by financial interdependence. Interdependence creates incentives for national regulators to adopt the banking standards that prevail in jurisdictions to which they are connected through the international activities of banks and transnational networks of bank supervisors. We test our argument by estimating a series of spatial lag and spatial autoregressive models, drawing on a new dataset of Basel II adoption. We find evidence that regulators in the financial periphery converge on the regulatory behavior of jurisdictions where their banks have foreign operations, and that regulators are influenced by the behavior of their peers in international networks. To a lesser extent, regulators are influenced by the behavior of regulators in the home jurisdictions of foreign banks, and the behavior of regulators in countries with whom they compete for investment.

The Limits of Globalizing Basel Banking StandardsJournal of Financial Regulation, Volume 3, Issue 1, 1 March 2017, Pages 89–124. With Emily Jones.

Though designed by a selective group of regulators from the world’s largest financial centres, Basel banking standards are being implemented far beyond the financial core, and this is often seen as confirmation of their global relevance. Yet, we show that the implementation of Basel II and III is shallow and highly selective in most countries outside of the Basel Committee on Banking Supervision. Drawing on primary and secondary sources and regression analysis, we attribute shallow and highly selective adoption to the sheer complexity of the standards, and the fact that they need substantial modification before they can be fully implemented, particularly in developing countries. Implementation challenges are compounded by gaps in the financial market infrastructure, notably credit rating agencies, as well as shallow capital markets. Beyond this, we attribute cross-country variation in implementation to differences in the underlying political economy of the banking sector. Countries are likely to pursue relatively high levels of Basel II and III implementation when large foreign and internationally active domestic banks operate in their jurisdiction and when they have a market-oriented approach to the financial sector. Conversely, countries are likely to pursue relatively low levels of implementation when they have few internationally active banks and a more interventionist approach.

Under review

Migration and cross-border banking: The missing link? With David Leblang
Cascading noncompliance: Explaining how international cooperation breaks down. With Jonas Bunte and Geoffrey Gertz

In-progress and working papers

Paying for Sovereignty? The conditional nature of risk perception and African governments’ entry into international bond markets. * 2019 Best Graduate Paper Award, International Political Economy Section of the International Studies Association.
When Are Diaspora Communities Willing to Finance Development at Home? A Survey Experiment on Diaspora Bonds. With Lindsay Dolan
A new politics of aid? The Ghanaian case in the changing international political economy of development assistance Global Economic Governance Programme Working Paper Series 2015/104
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