Click here for search results
Sovereign defaults and expropriations : empirical regularities
 
Author:Eden, Maya; Kraay, Aart; Qian, Rong; Collection Title:Policy Research working paper ; no. WPS 6218
Country:World; Date Stored:2012/10/03
Document Date:2012/10/01Document Type:Policy Research Working Paper
SubTopics:Bankruptcy and Resolution of Financial Distress; External Debt; Emerging Markets; Debt Markets; Investment and Investment ClimateLanguage:English
Region:The World RegionReport Number:WPS6218
Volume No:1 of 1  

Summary: This paper uses a large cross-country dataset to empirically examine factors associated with sovereign defaults on external private creditors and expropriation of foreign direct investments in developing countries since the 1970s. In the long run, sovereign defaults and expropriations are likely to occur in the same countries. In the short run, however, these events are uncorrelated. Defaults are more likely to occur following periods of rapid debt accumulation, when growth is low, and in countries with weak policy performance, and defaults are not strongly persistent over time. In contrast, expropriations are not systematically related to the level of foreign direct investment, to growth, or to policy performance. Expropriations are however less likely under right-wing governments, and are strongly persistent over time. There is also little evidence that a history of recent defaults is associated with expropriations, and vice versa. The paper discusses the implications of these findings for models that emphasize retaliation as means for sustaining sovereign borrowing and foreign investment in equilibrium, as well as the implications for political risk insurance against the two types of events.

Official Documents
Official, scanned versions of documents (may include signatures, etc.)
File TypeDescriptionFile Size (mb)
PDF 36 pagesOfficial version*2.52 (approx.)
TextText version**
How To Order

* The official version is derived from scanning the final, paper copy of the document and is the official,
archived version including all signatures, charts, etc.
** The text version is the OCR text of the final scanned version and is not an accurate representation of the final text.
It is provided solely to benefit users with slow connectivity.



Permanent URL for this page: http://go.worldbank.org/EI8KLMA2B0