Sovereign bond ratings and the democratic advantage: Portfolio investment in the developing world

Comparative Political Studies

Volumn 41, Issue 8, 2008, Pages 1092-1116

  Biglaiser, Glen ^a   Hicks, Brian ^a   Huggins, Caitlin ^a  

^a TEXAS TECH UNIVERSITY   (United States)

Author keywords

Bond ratings; Democratic advantage; Developing countries; Heckman model; Portfolio investment

Indexed keywords

EID: 46249118869     PISSN: 00104140     EISSN: 15523829     Source Type: Journal    
DOI: 10.1177/0010414007308021     Document Type: Article

References (55)

1. Achen, C.H. (2000, July). Why lagged dependent variables can suppress the explanatory power of other independent variables. Paper presented at the annual meeting of the political methodology section of the American Political Science Association, UCLA.
2. Afonso, A. (2003). Understanding the determinants of sovereign debt ratings: Evidence for the two leading agencies. Journal of Economics and Finance, 27 (1). 56-74.
3. Agarwal, J.P., Gubitz, A., & Nunnenkamp, P. (1992). Foreign direct investment in developing countries: The case of Germany. Ann Arbor: University of Michigan Press.
4. Ahlquist, J.S. (2006). Economic policy, institutions, and capital flows: Portfolio and direct investment flows in developing countries. International Studies Quarterly, 50 (3). 681-704.
5. Alesina, A., & Drazen, A. (1991). Why are stabilizations delayed ? American Economic Review 81 (5). 1170-1188.
6. Archer, C.C., Biglaiser, G., & DeRouen, K., Jr. (2007). Sovereign bond ratings and democracy: The effects of regime type in the developing world. International Organization, 61 (2). 341-365.
7. Beck, & Katz, J.N. (2004). Time-series-cross-section issues: Dynamics, 2004. Unpublished manuscript, University of California - San Diego.
8. Beck, T., Clarke, G., Groff, A., Keefer, P., & Walsh, P. (2002). New tools and new tests in comparative political economy: The database of political institutions. Washington, DC: World Bank.
9. Bernhard, W., & Leblang, D. (2006). Democratic processes and financial markets: Pricing politics. New York: Cambridge University Press
10. Biglaiser, G., & DeRouen, K., Jr. (2007 a). Following the flag: Troop deployment and U.S. foreign direct investment. International Studies Quarterly, 51 (4). 835-854.
11. Biglaiser, G., & DeRouen, K., Jr. (2007 b). Sovereign bond ratings and neoliberalism in Latin America. International Studies Quarterly, 51 (1). 121-138.
12. Blanton, S.L. (2000). Promoting human rights and democracy in the developing world: U.S. rhetoric versus U. S. arms exports. American Journal of Political Science, 44 (1). 123-131.
13. Block, S., & Vaaler, P. (2004). The price of democracy: Sovereign risk ratings, bond spreads and political business cycles in developing countries. Journal of International Money and Finance, 23 (6). 917-946.
14. Bloomberg International. (2006). International bond series: Bloomberg on-line data services. New York: Author.
15. Brownsberger, W.N. (1983). Development and governmental corruption-materialism and political fragmentation in Nigeria. Journal of Modern African Studies, 21 (2). 215-233.
16. Cantor, R., & Packer, F. (1996). Determinants and impact of sovereign credit ratings. Economic Policy Review, 2 (2). 37-53.
17. Cheibub, J.A., & Gandhi, J. (2004, September). Classifying political regimes: A six-fold classification of democracies and dictatorships. Paper presented at the annual meeting of the American Political Science Association, Chicago.
18. Crenshaw, E. (1991). Foreign direct investment as a dependent variable. Social Forces, 69 (4). 1169-1182.
19. Easterly, W. (2001). Does foreign aid add up ? Foreign Policy, 125, 94-99.
20. Eichengreen, B., & Mody, A. (1998). What explains changing spreads on emerging market debt: Fundamentals or market sentiment? (National Bureau of Economic Research Working Paper No. 6408). Cambridge, MA: National Bureau of Economic Research
21. Heckman, J.J. (1979). Sample selection bias as a specification error. Econometrica, 47, 153-161.
22. Henisz, W.J. (2000). The institutional environment for multilateral investment. Journal of Law, Economics and Organization, 16 (2). 344-364.
23. Huntington, S.P. (1968). Political order in changing societies. New Haven, CT: Yale University Press.
24. Institutional Investor. (Various years). Country risk ratings. New York: Author.
25. Jensen, N.M. (2003). Democratic governance and multinational corporations: Political regimes and inflows of foreign direct investment. International Organization, 57, 587-616.
26. Jensen, N.M. (2006). Nation-states and the multinational corporations: A political economy of foreign direct investment. Princeton, NJ: Princeton University Press.
27. Johnson, G.B., & Crisp, B.F. (2003). Mandates, powers, and policies. American Journal of Political Science, 47 (1). 127-141.
28. Kaminsky, G., & Schmukler, S.L. (2002). Emerging market instability: Do sovereign ratings affect country risk and stock returns ? World Bank Economic Review, 16 (2). 171-195.
29. Keele, L., & Kelly, N. (2004). Dynamic models for dynamic theories: The ins and outs of lagged dependent variables. Retrieved May 11, 2006, from http://polmeth.wustl.edu/papers/04/LDVApril21.pdf
30. Larran, G., Reisen, H., & von Maltzan, J. (1997). Emerging market risk and sovereign credit ratings (Organisation for Economic Co-operation and Development Working Paper No. 124). Retrieved September 20, 2007, from http://www.oecd.org/dataoecd/38/42/1922778.pdf
31. Levine, R. (2001). International financial liberalization and economic growth. Review of International Economics, 9 (4). 688-702.
32. Levis, M. (1979). Does political instability in developing countries affect foreign investment flow? An empirical examination. Management International Review, 19 (3). 59-68.
33. Li, Q., & Resnick, A. (2003). Reversal of fortunes: Democratic institutions and foreign direct investment inflows to developing countries. International Organization, 57, 175-211.
34. Little, A., & Leblang, D. (2004, September). Military securities: Financial flows and the deployment of U.S. troops. Paper presented at the annual meeting of the American Political Science Association.
35. Marshall, M.G., & Jaggers, K. (2006). Polity IV project: Political regime characteristics and transitions, 1800-2004. College Park: University of Maryland. Retrieved September 20, 2007, from http://www.cidcm.umd.edu/polity/
36. Mosley, L. (2002). Global capital and national governments. Cambridge, UK: Cambridge University Press.
37. North, D.C., & Weingast, B.R. (1989). Constitutions and commitment: The evolution of institutions governing public choice in seventeenth-century England. Journal of Economic History, 49 (4). 803-832.
38. Oneal, J. (1994). The affinity of foreign investors for authoritarian regimes. Political Research Quarterly, 47 (3). 565-589.
39. The Political Risk Services Group. (2007). International country risk guide. Retrieved September 20, 2007, from http://www.icrgonline.com/page.aspx? page=icrgmethods
40. Przeworski, A., & Limongi, F. (1997). Modernization: Theories and facts. World Politics, 49 (2). 155-183.
41. Reed, W. (2000). A unified statistical model of conflict onset and escalation. American Journal of Political Science, 44 (1). 84-93.
42. Reisen, H., & Soto, M. (2001). Which type of capital inflows foster developing-country growth ? International Finance, 4 (1). 1-14.
43. Saiegh, S.M. (2005). Do countries have a 'democratic advantage'? Political institutions, multilateral agencies, and sovereign borrowing. Comparative Political Studies, 38 (4). 366-387.
44. Schultz, K.A., & Weingast, B.R. (1996). The democratic advantage: The institutional sources of state power in international competition (Essays in Public Policy, No. 67). Stanford, CA: Hoover Institution Press.
45. Schultz, K.A., & Weingast, B.R. (1998). Limited governments, powerful states. In R. M. Siverson (Ed.), Strategic politicians, institutions, and foreign policy (pp. 15-50). Ann Arbor: University of Michigan Press.
46. Schultz, K.A., & Weingast, B.R. (2003). The democratic advantage. International Organization, 57 (1). 3-42.
47. Sinclair, T.J. (2005). The new masters of capital: American bond rating agencies and the politics of creditworthiness. Cornell, NY: Cornell University Press.
48. Standard and Poor's. (2004). Sovereign credit characteristics by rating category. Retrieved September 20, 2007, from http://www.2.standardandpoors.com/ portal/site/sp/en/us/page.article/2,1,1,0,1105461441337.html?vregion= us&vlang=en
49. Stiglitz, J.E. (2002). Globalization and its discontents. New York: Norton.
50. Tomz, M. (2007). Sovereign debt and international cooperation: Reputational reasons for lending and repayment. Princeton, NJ: Princeton University Press.
51. Tuman, J.P., & Emmert, C.F. (2004). The political economy of U.S. foreign direct investment in Latin America: A reappraisal. Latin American Research Review, 39 (3). 9-28.
52. Vaaler, P.M., & McNamara, G. (2004). Crisis and competition in expert organizational decision making: Credit-rating agencies and their response to turbulence in emerging economies. Organization Science: A Journal of the Institute of Management Sciences, 15 (6). 687-703.
53. Vaaler, P.M., Schrage, B.N., & Block, S.A. (2005). Counting the investor vote: Political business cycle effects on sovereign bond spreads in developing countries. Journal of International Business Studies, 36 (1). 62-88.
54. Vaaler, P.M., Schrage, B.N., & Block, S.A. (2006). Elections, opportunism, partisanship and sovereign ratings in developing countries. Review of Development Economics, 10 (1). 154-170.
55. World Bank. (2006). World development indicators. Washington, DC: Author.