IDEAS home Printed from https://ideas.repec.org/p/pav/demwpp/demwp0157.html
   My bibliography  Save this paper

Development Finance in the age of Financial Mercantilism

Author

Listed:
  • Gianni Vaggi

    (Department of Economics and Management, University of Pavia)

Abstract

On September 2015 the UN General Assembly approved a resolution sometimes called Agenda 2030, with 17 Sustainable Development Goals, SDGs, to be attained by 2030. The achievement of the SDGs could require hundreds of trillion dollars. Financial flows to developing have greatly increased since 2000, in particular Foreign Direct Investments and remittances, but also Portfolio flows. A lot of the money seems to be available in financial market. However today international finance is characterized by Financial Mercantilism, FM. There are many similarities between the operation of the seventeen century merchants and today financial intermediaries. Resorting to notions derived from history of economic ideas the paper identifies the elements which characterize FM and which portray the role of finance in the present phase of the capitalist system. Financial Mercantilism is not the ideal setting for long-term development finance and to channel funds towards developing countries, which could be hurt by a the debt crisis similar to that experienced in the eighties. The paper shows how to mitigate the possible negative impacts of Financial Mercantilism on development finance. Policy recommendations are hinted in the conclusive part of the paper. Financing for development cannot be left to international financial markets, but it requires some specific tools and instruments. The paper briefly discusses the case of indexed bonds and contends that development finance should take place on separate markets. It is a long paper and the reader might wish to focus on some issues. If you are interested on Financial Mercantilism go to sections 3 and 4. If you are interested on financing for development focus on sections 5 and 6. The index will help. Section 1 deals with the means of financing needs the Sustainable Development Goals and with the problem of how to finance developing countries Section 2 examines the lessons which could have be drawn from the debt of the eighties. Section 3 examines the evolution in of international finance since the seventies while in section 4 there is an analysis of the main features of Financial Mercantilism. Section 5 examines the role of sovereign bonds in development finance and section 6 presents three proposals to make development finance more sustainable and more equitable.

Suggested Citation

  • Gianni Vaggi, 2018. "Development Finance in the age of Financial Mercantilism," DEM Working Papers Series 157, University of Pavia, Department of Economics and Management.
    • Handle: RePEc:pav:demwpp:demwp0157
    as

    Download full text from publisher

    File URL: http://dem-web.unipv.it/web/docs/dipeco/quad/ps/RePEc/pav/demwpp/DEMWP0157.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. David Barr & Oliver Bush & Alex Pienkowski, 2014. "GDP-linked Bonds and Sovereign Default," International Economic Association Series, in: Joseph E. Stiglitz & Daniel Heymann (ed.), Life After Debt, chapter 4, pages 246-275, Palgrave Macmillan.
    2. Rodolphe Dos Santos Ferreira, 2012. "Two views of competition: “Is it peace or war?”," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 19(6), pages 852-867, December.
    3. Stephany Griffith-Jones & Krishnan Sharma, 2006. "GDP-Indexed Bonds: Making It Happen," Working Papers 21, United Nations, Department of Economics and Social Affairs.
    4. World Commission on Environment and Development,, 1987. "Our Common Future," OUP Catalogue, Oxford University Press, number 9780192820808.
    5. Jean Arcand & Enrico Berkes & Ugo Panizza, 2015. "Too much finance?," Journal of Economic Growth, Springer, vol. 20(2), pages 105-148, June.
    6. Gianni Vaggi, 2002. "Trade and Sustainable Finance for Development," WIDER Working Paper Series DP2002-64, World Institute for Development Economic Research (UNU-WIDER).
    7. United Nations UN, 2015. "Transforming our World: the 2030 Agenda for Sustainable Development," Working Papers id:7559, eSocialSciences.
    8. Sergio Tezanos V�zquez & Andy Sumner, 2013. "Revisiting the Meaning of Development: A Multidimensional Taxonomy of Developing Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 49(12), pages 1728-1745, December.
    9. Eduardo Borensztein & Paolo Mauro, 2004. "The case for GDP-indexed bonds [‘World income components: measuring and exploiting risk-sharing opportunities’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 19(38), pages 166-216.
    10. Stephany Griffith-Jones, 2014. "A Brics Development Bank: A Dream Coming True?," UNCTAD Discussion Papers 215, United Nations Conference on Trade and Development.
    11. Lynge Nielsen, 2013. "How to Classify Countries Based on Their Level of Development," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 114(3), pages 1087-1107, December.
    12. Gianni Vaggi & Peter Groenewegen, 2003. "A Concise History of Economic Thought," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-50580-3, March.
    13. Clara Capelli & Gianni Vaggi, 2016. "Why Gross National Disposable Income Should Replace Gross National Income," Development and Change, International Institute of Social Studies, vol. 47(2), pages 223-239, March.
    Full references (including those not matched with items on IDEAS)

    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. Gianni Vaggi, 2015. "Development and the post-2015 challenges: making the Sustainable Development Goals work," DEM Working Papers Series 107, University of Pavia, Department of Economics and Management.
    2. Consiglio, Andrea & Zenios, Stavros A., 2018. "Pricing and hedging GDP-linked bonds in incomplete markets," Journal of Economic Dynamics and Control, Elsevier, vol. 88(C), pages 137-155.
    3. Gianni Vaggi, 2017. "The rich and the poor: A note on countries’ classification," PSL Quarterly Review, Economia civile, vol. 70(280), pages 59-82.
    4. Ibrahim Ari & Muammer Koc, 2018. "Sustainable Financing for Sustainable Development: Understanding the Interrelations between Public Investment and Sovereign Debt," Sustainability, MDPI, vol. 10(11), pages 1-25, October.
    5. Ingrid Boas & Frank Biermann & Norichika Kanie, 2016. "Cross-sectoral strategies in global sustainability governance: towards a nexus approach," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 16(3), pages 449-464, June.
    6. Wilson, Christopher & van der Velden, Maja, 2022. "Sustainable AI: An integrated model to guide public sector decision-making," Technology in Society, Elsevier, vol. 68(C).
    7. Anne P. M. Velenturf & Phil Purnell, 2017. "Resource Recovery from Waste: Restoring the Balance between Resource Scarcity and Waste Overload," Sustainability, MDPI, vol. 9(9), pages 1-17, September.
    8. Nikos Chatzistamoulou & Phoebe Koundouri, 2020. "The Economics of Sustainable Development," DEOS Working Papers 2005, Athens University of Economics and Business.
    9. OGREAN Claudia, 2015. "Corporate Initiatives And Strategies To Meet The Environmental Challenges – Contributions Towards A Green Economic Development," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 10(3), pages 62-70, December.
    10. Wiśniewska Anna Maria, 2021. "Sustainable development and management of medical tourism companies in Poland," International Journal of Management and Economics, Warsaw School of Economics, Collegium of World Economy, vol. 57(2), pages 151-160, June.
    11. Vic Benuyenah, 2024. "Economies as 'Makers' or 'Users': Rectifying the Polysemic Quandary with a Dualist Taxonomy," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 3100-3121, March.
    12. Simon Ling & Adam Landon & Michael Tarrant & Donald Rubin, 2021. "The Influence of Instructional Delivery Modality on Sustainability Literacy," Sustainability, MDPI, vol. 13(18), pages 1-15, September.
    13. Mauricio Drelichman & Hans-Joachim Voth, 2015. "Risk sharing with the monarch: contingent debt and excusable defaults in the age of Philip II, 1556–1598," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 9(1), pages 49-75, January.
    14. Gianni Vaggi & Annalisa Prizzon, 2014. "On the sustainability of external debt: is debt relief enough?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 38(5), pages 1155-1169.
    15. Esther Prieto-Jiménez & Luis López-Catalán & Blanca López-Catalán & Guillermo Domínguez-Fernández, 2021. "Sustainable Development Goals and Education: A Bibliometric Mapping Analysis," Sustainability, MDPI, vol. 13(4), pages 1-20, February.
    16. Juliana Segura-Salazar & Luís Marcelo Tavares, 2018. "Sustainability in the Minerals Industry: Seeking a Consensus on Its Meaning," Sustainability, MDPI, vol. 10(5), pages 1-38, May.
    17. Luis Fonseca & Filipe Carvalho & Gilberto Santos, 2023. "Strategic CSR: Framework for Sustainability through Management Systems Standards—Implementing and Disclosing Sustainable Development Goals and Results," Sustainability, MDPI, vol. 15(15), pages 1-24, August.
    18. Michaela Maurer & Franz Xaver Bogner, 2020. "First steps towards sustainability? University freshmen perceptions on nature versus environment," PLOS ONE, Public Library of Science, vol. 15(6), pages 1-16, June.
    19. Kosa Golić & Vesna Kosorić & Slavica Stamatovic Vuckovic & Kosara Kujundzic, 2023. "Strategies for Realization of Socially Sustainable Residential Buildings: Experts’ Perspectives," Sustainability, MDPI, vol. 15(9), pages 1-31, April.
    20. Else Ragni Yttredal & Nathalie Homlong, 2020. "Perception of Sustainable Development in a Local World Heritage Perspective," Sustainability, MDPI, vol. 12(21), pages 1-19, October.

    More about this item

    Keywords

    Development Finance; Financial Mercantilism; Sustainable Development;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:pav:demwpp:demwp0157. 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: Alice Albonico (email available below). General contact details of provider: https://edirc.repec.org/data/dppavit.html .

    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.