TY - JOUR
T1 - Local Currency Bond Markets in Africa
T2 - Resilience and Subordination
AU - Dafe, Florence
AU - Kaltenbrunner, Annina
AU - Kvangraven, Ingrid Harvold
AU - Weigandi, Iván
N1 - Funding Information:
We are grateful to the participants of the Development and Change workshop ‘Debt Crisis in the Majority World’, which took place in The Hague, The Netherlands (17–18 November 2022), particularly Anne Löscher, as well as to the anonymous reviewers and journal editors for their useful feedback and comments. Thanks also to Maria Eugenia Giraudo, Caroline Metz, Anjelo Okot and Jonathan Perraton who were co-investigators of the White Rose-funded project on African debt with Annina Kaltenbrunner and Ingrid Kvangraven, which allowed us to carry out interviews with development finance institutions in London in 2019–20. Finally, we also like to thank Jan Toporowski, Frauke Banse, Ugo Panizza, Daniela Gabor and Ian Harding for their valuable comments. All four authors contributed equally to this piece.
Publisher Copyright:
© 2023 The Authors. Development and Change published by John Wiley & Sons Ltd on behalf of Institute of Social Studies.
PY - 2023/12/1
Y1 - 2023/12/1
N2 - This article examines the development and implications of local currency bond markets (LCBMs) in African countries in the context of international financial subordination (IFS). Despite the promotion of LCBMs as a solution to debt vulnerability, there is a dearth of research that offers a systematic empirical examination of their actual benefits along with conceptual explanations as to when and why such benefits may or may not materialize. This is especially true for countries at the bottom of the global economic hierarchy. To explore how the subordination in global production and financial systems shapes LCBM development, the article offers an empirical analysis of selected African countries that combines interviews with policy makers, officials and experts with statistical data. The findings suggest that while LCBMs offer some benefits, such as mitigating risks associated with foreign currency debt, their potential is limited by the structural processes created by IFS, such as their dependence on the global financial cycle, the relatively higher costs of this debt and the sustained constraint on macroeconomic policy making. However, there are also domestic factors which shape how these structural constraints are mediated in the context of LCBM development — in particular, historically developed financial structures of developing countries, the political economy of the state and the structure of production. This study thus contributes to the debate about the developmental benefits of domestic debt market development and the emerging research agenda on IFS.
AB - This article examines the development and implications of local currency bond markets (LCBMs) in African countries in the context of international financial subordination (IFS). Despite the promotion of LCBMs as a solution to debt vulnerability, there is a dearth of research that offers a systematic empirical examination of their actual benefits along with conceptual explanations as to when and why such benefits may or may not materialize. This is especially true for countries at the bottom of the global economic hierarchy. To explore how the subordination in global production and financial systems shapes LCBM development, the article offers an empirical analysis of selected African countries that combines interviews with policy makers, officials and experts with statistical data. The findings suggest that while LCBMs offer some benefits, such as mitigating risks associated with foreign currency debt, their potential is limited by the structural processes created by IFS, such as their dependence on the global financial cycle, the relatively higher costs of this debt and the sustained constraint on macroeconomic policy making. However, there are also domestic factors which shape how these structural constraints are mediated in the context of LCBM development — in particular, historically developed financial structures of developing countries, the political economy of the state and the structure of production. This study thus contributes to the debate about the developmental benefits of domestic debt market development and the emerging research agenda on IFS.
UR - http://www.scopus.com/inward/record.url?scp=85174204835&partnerID=8YFLogxK
U2 - 10.1111/dech.12797
DO - 10.1111/dech.12797
M3 - Article
AN - SCOPUS:85174204835
SN - 0012-155X
VL - 54
SP - 1031
EP - 1064
JO - DEVELOPMENT AND CHANGE
JF - DEVELOPMENT AND CHANGE
IS - 5
ER -
