IDEAS home Printed from https://ideas.repec.org/a/eee/intman/v9y2003i3p287-304.html
   My bibliography  Save this article

National governance and global lending

Author

Listed:
  • Sobel, Andrew C.

Abstract

Global capital markets expanded rapidly during the latter part of the 20th century. Many access these global capital markets, but many others watch from the sidelines. National political arrangements help account for systematic disparities in access to global capital. Investigators employ a variety of measures and strategies as they try to understand the influence of political arenas upon economic activity. As they try to access political effects, some use relatively objective measures based upon formal political institutional arrangements, and others use more subjective measures to reflect the influence of the political arena. I suggest the formal institutional approach works well for developed political economies but exposes research to measurement problems when applied to developing nations where political institutional arrangements are emerging and have yet to gain firm footholds in society. Using more subjective measures, I show that democracy and regulatory stability matter as they influence investor behavior. Lending in global capital markets correlates well with better regulatory arenas and greater democracy. These provide information to international investors about threats from the state, which affects expectations about the risk to investments from local arenas.

Suggested Citation

  • Sobel, Andrew C., 2003. "National governance and global lending," Journal of International Management, Elsevier, vol. 9(3), pages 287-304.
  • Handle: RePEc:eee:intman:v:9:y:2003:i:3:p:287-304
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1075425303000401
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alberto Alesina & Dani Rodrik, 1994. "Distributive Politics and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 465-490.
    2. Yingyi Qian & Barry R. Weingast, 1997. "Federalism as a Commitment to Reserving Market Incentives," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 83-92, Fall.
    3. Helliwell, John F., 1994. "Empirical Linkages Between Democracy and Economic Growth," British Journal of Political Science, Cambridge University Press, vol. 24(2), pages 225-248, April.
    4. Wittman, Donald, 1989. "Why Democracies Produce Efficient Results," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1395-1424, December.
    5. Cukierman, Alex & Webb, Steven B & Neyapti, Bilin, 1992. "Measuring the Independence of Central Banks and Its Effect on Policy Outcomes," The World Bank Economic Review, World Bank, vol. 6(3), pages 353-398, September.
    6. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, vol. 84(3), pages 600-621, June.
    7. Keech,William R., 1995. "Economic Politics," Cambridge Books, Cambridge University Press, number 9780521467681, October.
    8. Rodrik, Dani, 1989. "Promises, Promises: Credible Policy Reform via Signalling," Economic Journal, Royal Economic Society, vol. 99(397), pages 756-772, September.
    9. William D. Nordhaus, 1975. "The Political Business Cycle," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(2), pages 169-190.
    10. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    11. Robert J. Barro, 1994. "Democracy & Growth," NBER Working Papers 4909, National Bureau of Economic Research, Inc.
    12. Persson, Torsten, 1988. "An introduction and a broad survey," European Economic Review, Elsevier, vol. 32(2-3), pages 519-532, March.
    13. Leblang, David A., 1997. "Political Democracy and Economic Growth: Pooled Cross-Sectional and Time-Series Evidence," British Journal of Political Science, Cambridge University Press, vol. 27(3), pages 453-472, July.
    14. Adam Przeworski & Fernando Limongi, 1993. "Political Regimes and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 51-69, Summer.
    15. Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross‐Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
    16. Scully, Gerald W, 1988. "The Institutional Framework and Economic Development," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 652-662, June.
    17. Rama, Martin, 1993. "Rent seeking and economic growth : A theoretical model and some empirical evidence," Journal of Development Economics, Elsevier, vol. 42(1), pages 35-50, October.
    18. Jamuna Agarwal, 1980. "Determinants of foreign direct investment: A survey," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 116(4), pages 739-773, December.
    19. Keefer, Philip & Knack, Stephen, 1997. "Why Don't Poor Countries Catch Up? A Cross-National Test of Institutional Explanation," Economic Inquiry, Western Economic Association International, vol. 35(3), pages 590-602, July.
    20. Keech,William R., 1995. "Economic Politics," Cambridge Books, Cambridge University Press, number 9780521462068, October.
    21. W. J. Henisz, 2000. "The Institutional Environment for Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 1-31, March.
    22. Kormendi, Roger C. & Meguire, Philip G., 1985. "Macroeconomic determinants of growth: Cross-country evidence," Journal of Monetary Economics, Elsevier, vol. 16(2), pages 141-163, September.
    23. Tsebelis, George, 1995. "Decision Making in Political Systems: Veto Players in Presidentialism, Parliamentarism, Multicameralism and Multipartyism," British Journal of Political Science, Cambridge University Press, vol. 25(3), pages 289-325, July.
    24. Olson, Mancur, 1993. "Dictatorship, Democracy, and Development," American Political Science Review, Cambridge University Press, vol. 87(3), pages 567-576, September.
    25. Mr. D. F. I. Folkerts-Landau & Mr. Donald J Mathieson & Mr. Morris Goldstein & Ms. Liliana Rojas-Suárez & Mr. José Saúl Lizondo & Mr. Timothy D. Lane, 1991. "Determinants and Systemic Consequences of International Capital Flows," IMF Occasional Papers 1991/008, International Monetary Fund.
    26. Burkhart, Ross E. & Lewis-Beck, Michael S., 1994. "Comparative Democracy: The Economic Development Thesis," American Political Science Review, Cambridge University Press, vol. 88(4), pages 903-910, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Boudriga, Abdelkader & Boulila, Neila & Jellouli, Sana, 2009. "Does bank supervision impact nonperforming loans : cross-country determinants using agregate data ?," MPRA Paper 18068, University Library of Munich, Germany.
    2. Waquar Ahmed, 2018. "Governing Foreign Direct Investment: Post-Enron Initiatives in India," Review of Radical Political Economics, Union for Radical Political Economics, vol. 50(1), pages 5-23, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sobel, Andrew C., 2002. "State institutions, risk, and lending in global capital markets," International Business Review, Elsevier, vol. 11(6), pages 725-752, December.
    2. Iqbal, Nasir & Khan, Sardar Javaid Iqbal & Irfan, Muhammad, 2008. "Democracy, Autocracy and Macroeconomic Performance in Pakistan," MPRA Paper 28122, University Library of Munich, Germany.
    3. Johannes Fedderke, 2001. "Growth and institutions," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(6), pages 645-670.
    4. Witold Jerzy Henisz, 2004. "Political Institutions and Policy Volatility," Economics and Politics, Wiley Blackwell, vol. 16(1), pages 1-27, March.
    5. Mohtadi, Hamid & Roe, Terry L., 2003. "Democracy, rent seeking, public spending and growth," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 445-466, March.
    6. Alberto Chong & Luisa Zanforlin, 2004. "Inward-Looking Policies, Institutions, Autocrats, and Economic Growth in Latin America: An Empirical Exploration," Public Choice, Springer, vol. 121(3), pages 335-361, February.
    7. Jeffrey Edwards & Frank Thames, 2010. "Growth volatility and the interaction between economic and political development," Empirical Economics, Springer, vol. 39(1), pages 183-201, August.
    8. Mohtadi, Hamid & Roe, Terry L., 1997. "Democracy, rent seeking, and growth: Is there a U curve?," Bulletins 7485, University of Minnesota, Economic Development Center.
    9. Madeeha Gohar Qureshi & Eatzaz Ahmed, 2012. "The Inter-linkages between Democracy and Per Capita GDP Growth: A Cross Country Analysis," PIDE-Working Papers 2012:85, Pakistan Institute of Development Economics.
    10. Clague, Christopher & Keefer, Philip & Knack, Stephen & Olson, Mancur, 1996. "Property and Contract Rights in Autocracies and Democracies," Journal of Economic Growth, Springer, vol. 1(2), pages 243-276, June.
    11. Carl Henrik Knutsen, 2012. "Democracy and economic growth: A survey of arguments and results," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 15(4), pages 393-415, December.
    12. Gimenez, G. & Sanau, J., 2009. "Investment, Human Capital and Institutions: A Multi-equational Approach for the Study of Economic Growth, 1985-2000," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 9(1).
    13. KIRMANOGLU Hasan, 2010. "Political Freedom and Economic Well-being: A Causality Analysis," EcoMod2003 330700081, EcoMod.
    14. Knack, Stephen, 2002. "Social capital, growth and poverty: a survey of cross-country evidence," MPRA Paper 24893, University Library of Munich, Germany, revised 0200.
    15. Gregorio Jiménez & Jaime Sanaú, 2007. "The Desirability of Multi-equational Approaches for the Study of Economic Growth. An Empirical Evidence," Working Papers 02/07, Instituto Universitario de Análisis Económico y Social.
    16. Aron, Janine, 2000. "Growth and Institutions: A Review of the Evidence," The World Bank Research Observer, World Bank, vol. 15(1), pages 99-135, February.
    17. Andrea Asoni, 2008. "Protection Of Property Rights And Growth As Political Equilibria," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 953-987, December.
    18. Erdogdu, Erkan, 2013. "A cross-country analysis of electricity market reforms: Potential contribution of New Institutional Economics," Energy Economics, Elsevier, vol. 39(C), pages 239-251.
    19. Daron Acemoglu & Suresh Naidu & Pascual Restrepo & James A. Robinson, 2019. "Democracy Does Cause Growth," Journal of Political Economy, University of Chicago Press, vol. 127(1), pages 47-100.
    20. Gradstein, Mark, 2005. "Democracy, Property Rights, Redistribution and Economic Growth," CEPR Discussion Papers 5130, C.E.P.R. Discussion Papers.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:intman:v:9:y:2003:i:3:p:287-304. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/601266/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.