Financialization and Government Borrowing Capacity in Emerging Markets

IAIN HARDIE Lecturer in International Relations at the University of Edinburgh, UK. He has previously worked in investment banking in London and Hong Kong. He has published in a variety of journals, including Review of International Political Economy, Journal of Common Market Studies, New Political Economy, Economy and Society and The Sociological Review.

• Introduction Domestic Commercial Banks Domestic Individual Investors Domestic Institutional Investors International Investors Conclusion

'Why are some governments able to borrow more than others? Iain Hardie highlights the importance of the structure of, and agents within, government bond markets. Contrary to conventional wisdom, he shows how 'financialized' government bond markets undermine governments' borrowing capacity in important ways. This convincing argument deserves to be read not just by all scholars of finance but also policymakers seeking greater autonomy from the discipline of financial markets.' - Eric Helleiner, University of Waterloo, Canada 'The Global Financial Crisis has once again brought to the fore the question of what constraints financial markets place on governments' capacity to borrow. In this meticulously researched book, Hardie shows that, contrary to conventional wisdom, it is domestic investors who are often the dominant players in the financial markets of developing economies.' - John Ravenhill, Australian National University, Australia 'Who holds the reins on governments' borrowing capacity? Hardie demonstrates that it is the composition of domestic investors, and how engaged they are with international markets, that matters. Hardie's book comes with a warning to emerging market countries: financialization costs you autonomy. This brilliant study is a must read for all scholars of the international political economy.' - Leonard Seabrooke, Copenhagen Business School, Denmark and University of Warwick , UK