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The External Financing of Emerging Market Countries

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Author Info

  • Aleksandar Zaklan
  • Paolo Mauro
  • Martín Minnoni
  • André Faria

Abstract

We trace the history of where and why investors from the most advanced countries directed funds, ultimately helping finance economic development in emerging market countries. To do this, we analyze the determinants of international investors'' willingness to hold the external liabilities issued by emerging market countries, through cross-country regressions for both prices (bond spreads) and quantities (bond market capitalization or stocks of external liabilities) estimated at various points during two waves of financial globalization (1870-1913 and the present time). The data are drawn from primary sources for the historical period, and the much-expanded, new vintage of the Lane and Milesi-Ferretti (2006) data set for the modern period. The results suggest that, throughout the past one and a half centuries, a combination of human capital (including informal human capital) and institutional quality has been a key determinant of emerging market countries'' ability to attract international investors.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/205.

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Length: 49
Date of creation: 01 Sep 2006
Date of revision:
Handle: RePEc:imf:imfwpa:06/205

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Keywords: Emerging markets; Capital flows; External financing; primary enrollment; bond; bonds; school enrollment; primary school; bond yields; primary school enrollment; financial globalization; financial derivatives; educational attainment; international finance; primary education; sovereign bond; bond spreads; formal education; primary school students; sovereign bonds; emerging market bond; international capital; market bond; primary enrollment rates; bond index; government bonds; bond market capitalization; enrollment rates; gross enrollment; bond market; international capital markets; debt stocks; access to international bond markets; bond issues; enrollment data; school-age population; individual bonds; sovereign bond market; financial markets; international bond markets; bond markets; stock exchange; arithmetic; technological advances;

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References

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  1. Paolo Mauro & Nathan Sussman & Yishay Yafeh, 2002. "Emerging Market Spreads: Then Versus Now," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 117(2), pages 695-733, May.
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Citations

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Cited by:
  1. Ceyhun Elgin & Burak R. Uras, 2012. "Public Debt, Sovereign Default Risk and Shadow Economy," Working Papers, Bogazici University, Department of Economics 2012/10, Bogazici University, Department of Economics.
  2. Corinne Deléchat & John Wakeman-Linn & Smita Wagh & Gustavo Ramirez, 2009. "Sub-Saharan Africa's Integration in the Global Financial Markets," IMF Working Papers 09/114, International Monetary Fund.
  3. Sanjeev Gupta & Amine Mati & Emanuele Baldacci, 2008. "Is it (Still) Mostly Fiscal? Determinants of Sovereign Spreads in Emerging Markets," IMF Working Papers 08/259, International Monetary Fund.
  4. Fratzscher, Marcel & Imbs, Jean, 2007. "Risk Sharing, Finance and Institutions in International Portfolios," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6496, C.E.P.R. Discussion Papers.
  5. Mirakhor, Abbas, 2007. "Islamic Finance and Globalization: A Convergence?," MPRA Paper 56026, University Library of Munich, Germany.
  6. Abid, Fathi & Bahloul, Slah, 2011. "Selected MENA countries' attractiveness to G7 investors," Economic Modelling, Elsevier, Elsevier, vol. 28(5), pages 2197-2207, September.

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