Global financial cycle, commodity terms of trade and financial spreads in emerging markets and developing economies

Carrera, Jorge; Montes‐Rojas, Gabriel; Toledo, Fernando

doi:10.1016/j.strueco.2022.12.006

Cited by 4 publications

(4 citation statements)

References 18 publications

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“…The author shares the conclusion of J. Carrera et al (2023) on the importance of diversifying exports and increasing the share of exports of goods with a high level of added value in order to reduce sensitivity to fluctuations in the global financial situation. In their study, K.P.…”

Section: Indexmentioning

confidence: 91%

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2024

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Section: Indexmentioning

confidence: 91%

“…J. Carrera et al (2023) examined the impact of the global financial cycle on the terms of trade and financial spreads in developing countries, dividing them into net exporters and net commodity importers. For net commodity exporters, favourable global liquidity shocks lead to improved trade balances and lower financial spreads.…”

Section: Indexmentioning

confidence: 99%

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2024

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“…Both conditions apply to African countries. Additionally, economies primarily exporting commodities and with weaker global value chain integration are more susceptible to negative global financial shocks, such as an appreciation of the US dollar (Carrera et al., 2023; Shousha, 2019). Okot et al.…”

Section: International Financial Subordination and Developmental Impl...mentioning

confidence: 99%

“…23. Interview, international fund manager, online, November 2021; Interview, international fund manager, online, January 2023. chain integration are more susceptible to negative global financial shocks, such as an appreciation of the US dollar (Carrera et al, 2023;Shousha, 2019). Okot et al (2022) show that, for African countries, productive factors have a strong influence on exchange rate volatility.…”

Section: Resilience Financial Fragility and External Vulnerabilitymentioning

confidence: 99%

Local Currency Bond Markets in Africa: Resilience and Subordination

Dafe,

Kaltenbrunner,

Kvangraven

et al. 2023

Development and Change

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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.

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