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Interesting article, but I think it falls foul of the same charges of over simplification that the authors levy against policy-makers in evoking the 'financial colonialism' narrative.
A couple of thoughts. https://twitter.com/EmmaMAshford/status/1358130579200425988
A couple of thoughts. https://twitter.com/EmmaMAshford/status/1358130579200425988
My worry is less that countries fall victim to a defined, cunning plan for asset capture due to onerous terms, but rather that with little fiscal space, growth and development upsides aren't commensurate with the debt/investment decisions.
What's the opportunity cost? Opaque agreements that circumvent standard procurement and investment processes hardly instill confidence in local business environments, and risk lessening the sense of urgency in addressing big, tough challenges.
When we did a big project on infrastructure connectivity in Eurasia in 2018-19, one of the key messages was simply that govts faced capacity challenges in selecting investment projects that were sustainable and helped *their* development.
These financing decisions aren't altruistic.
For example, taking a 2bn USD loan to build road to transit Chinese goods isn't going to bring jobs, but is going to bring a maintenance bill.
How many times have we heard Central Asian countries saying they'll become 'transit hubs'?
For example, taking a 2bn USD loan to build road to transit Chinese goods isn't going to bring jobs, but is going to bring a maintenance bill.
How many times have we heard Central Asian countries saying they'll become 'transit hubs'?
The risk for me is therefore more about can-kicking. I.e., in transition countries, does the lure of easy finance for projects with limited upsides risk complicating efforts to (forgive me) * build back better * ?
In short, political economy risks with project selection, management, procurement, reform priorities etc are complicated if not redoubled by the fiscal implications of such financing agreements.
