Globalizing Patient Capital: The Political Economy of Chinese Finance in the Americas

by Stephen B. Kaplan

Overview

China's overseas financing is a distinct form of patient capital that marshals the country's vast domestic resources to create commercial opportunities internationally. Its long-term risk tolerance and lack of policy conditionality has allowed developing economies to sidestep the fiscal austerity tendencies of Western markets and multilaterals. Employing statistical tests and extensive field research across China and Latin America, Stephen Kaplan finds that China's patient capital endows national governments with more room to maneuver in formulating domestic policies. The author goes on to evaluate the potential costs of Chinese financing, raising the question of how Chinese lenders will react to developing nation's ongoing struggles with debt and dependency. By disaggregating the structure of international finance, Globalizing Patient Capital has significant implications for the rise of China in Latin America, offering new insights about globalization and showing the costs and benefits of state versus market approaches to development.

Product Details

ISBN-13:	9781316863640
Publisher:	Cambridge University Press
Publication date:	07/15/2021
Sold by:	Barnes & Noble
Format:	eBook
File size:	5 MB

About the Author

Stephen B. Kaplan is Associate Professor of Political Science and International Affairs at George Washington University. He is the author of Globalization and Austerity Politics in Latin America (Cambridge, 2013).

Table of Contents

1. Introduction: China's Latin American Bankers; 2. The Emergence of Chinese Patient Capital; 3. Globalizing Patient Capital: A Theoretical Framework; 4. The Political Economy of Chinese Finance; 5. Chinese Financing and Latin American Fiscal Space; 6. Public Procurement's Check on Fiscal Expansion; 7. International Loans with Commercial Strings Attached; 8. Conclusion: A Dynamic Creditor-Debtor Relationship.

What People are Saying About This

From the Publisher

Advance praise: 'Today's integrated capital markets provide great opportunities for, and impose tight constraints on, governments in the developing world. In Globalization and Austerity Politics in Latin America, Stephen Kaplan provides a careful analysis of how and why Latin American governments have responded to the contemporary international economic environment. He shows, with cross-national statistical analysis and careful case studies, that governments respond to both international financial and domestic political pressures. Globalization can constrain national policies, but it does so within a domestic political context. This is a careful, thoughtful study that will be of great interest to scholars and students of Latin America, and of the political economy of development more generally.' Jeffry Frieden, Harvard University

'Why have governments on the left in Latin America adopted surprisingly conservative macroeconomic policies? Kaplan offers a sophisticated explanation of when and why we have seen this shift. By focusing on the internal political dynamics of financial market actors, he makes a convincing - yet nuanced - argument about the power of bond markets to shape government policies in a globalized world.' Kathleen McNamara, Georgetown University

'In an era of financial openness, some developing countries enjoy more autonomy vis-à-vis capital markets than others. Why? Stephen Kaplan convincingly suggests that the ways in which governments finance their debt and the ways in which political elites view their country's economic history both play a role. In nations that have experienced inflationary crises and that borrow via bonds (rather than from banks), conditions are ripe for a 'political austerity cycle'. Kaplan's analysis points to the importance of both ideational and material factors, and of both domestic and international forces, on elites' behavior in contemporary Latin America.' Layna Mosley, University of North Carolina, Chapel Hill

'In this deeply insightful and original book, Stephen Kaplan not only offers a fresh interpretation of how global financial markets constrain domestic policy makers in developing countries, but he explains the conditions under which these constraints are more or less confining. This is a first-rate contribution to the study of the political economy of democracy and development, and it breaks new ground in understanding how domestic policy choices are conditioned by international financial dependence.' Kenneth M. Roberts, Cornell University

Editorial Reviews

‘The best treatment of the political economy of China-Latin America finance to date. Kaplan shows how China’s ‘patient’ capital in Latin America may have the potential to support the region’s long-term development goals - in contrast with the volatile and conditional finance from the West. Kaplan shows that Latin American countries and China alike are climbing a learning curve to maximize the benefits and minimize the risks associated with their burgeoning economic relationship, while the United States sits puzzled and increasingly alarmed.’ Kevin Gallagher, Boston University

‘A valuable contribution to the burgeoning literature on China and Latin America. Kaplan argues that Chinese finance has a long-term approach and greater risk tolerance than Western capital. This enables Latin American governments to pursue their preferred development policies while avoiding the damaging cycles that have typified in the region. Both scholars and policymakers will benefit from reading the book.’ Barbara Stallings, Brown University

‘A must read for understanding the shifting role of China’s international investment. Kaplan provides the most convincing and nuanced analysis for understanding the evolution of China-Latin American interconnections and their potential trajectory as part of a larger Chinese strategy of international influence. This impressive book is crucial for scholars of both Latin American politics and international political economy. It will reshape our understanding of Latin American political economy and Chinese soft international power.’ Maria Victoria Murillo, Columbia University

‘Kaplan employs new loan data and hundreds of interviews to understand the costs and benefits of Chinese credit. His analysis suggests that Chinese policy banks’ longer time horizons and looser regulatory structures free borrowing governments from fiscal constraints and policy conditions. In exchange, borrowing governments offer a range of commercial concessions to their Chinese creditors, while also risking unsustainable debt burdens. This book offers important insights for anyone interested in the contemporary sovereign financing landscape.’ Layna Mosley, Princeton University

‘Globalizing Patient Capital is a rich resource for scholars and policy makers who are interested in how China is reshaping the financial landscape in Latin America and the developing world in general and how Chinese loan recipients are also learning how to negotiate with China as a creditor … this book offers a deeper understanding of China’s growing financial influence in the world.’ Victoria Chonn Ching, Perspectives on Politics

'… Kaplan presents an in-depth, carefully reasoned assessment of the sudden burst in Chinese lending to Latin American governments.' Richard Feinberg, Foreign Affairs

From the Publisher