Who Builds Up Foreign Debt And Who Brings It Down
At the recent meeting of the American Political Science Association, Pacific‘s Professor Yong Kyun Kim presented a poster “Who Builds Up Foreign Debt and Who Brings It Down?” His student attributes a great deal of change in foreign debt to political institutions. Here is his abstract:
We present an empirical analysis of the political determinants of foreign-debt buildup and reduction in developing countries. Three interesting patterns stand out. First, most factors exhibit nonlinearity when the dependent variable’s sign changes. Federalism, for instance, helps prevent a large debt buildup but does not promote a large debt reduction. Second, some factors are symmetric in the sense that they accelerate or dampen changes in both directions. Presidential systems are associated with a signiﬁcant rise in foreign debt as well as with its big fall. Finally, the way many political institutions are related to changes in foreign debt differs signiﬁcantly across different levels of democracy. Governments with a larger share of seats in the legislature and left governments are better able to bring their foreign debt down only if they are highly democratic. When highly autocratic, they make it less likely to happen. We show that political institutions as a whole explain a great deal of variation in the increase and decrease of foreign debt and that they do so in a complex manner.
You can see Professor Kim’s poster here: ykimapsa2011.