Chinese or western finance? Transparency, official credit flows, and the international political economy of development

Benjamin Cormier

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Why do some developing countries obtain more official finance from China vis-a-vis Western sources? This study finds borrower transparency significantly affects which governments borrow more from China. From a supply side perspective, Chinese lending agencies have incentives to lend more to untransparent borrowers. From a demand side perspective, untransparent borrowers have incentives to use Chinese finance to avoid Western pressure to become more transparent. These findings and explanations have three implications. First, they help explain variation in external debt composition across developing countries using official credit. Second, they have implications for the international political economy of developing countries’ financial ties to China. Third, they imply the use of Chinese finance may allow untransparent governments to remain so, an important implication for the political economy of development.

Keywords: China; transparency; official finance; aid; international political economy; development (search for similar items in EconPapers)
JEL-codes: F3 G3 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2023-04-01
New Economics Papers: this item is included in nep-cna and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in Review of International Organizations, 1, April, 2023, 18(2), pp. 297 - 328. ISSN: 1559-7431

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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:115294

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