Each Time is Different! The Shifting Boundaries of Emerging Market Debt

Abstract

Recent decades have witnessed not only a series of financial crises in both developed and developing countries, but also significant changes in the composition of overall debt. The global financial crisis of 2007–2009 highlighted the predicaments caused by rapidly rising levels of household debt, most famously in the form of so-called subprime loans, extended to riskier borrowers whose credit history and capacity to repay these loans was thought to be “less than ideal”. Yet little is known about household debt levels in emerging market economies. Indeed, if we move away from (largely government) debt to foreign creditors, little is known at all about the dynamics of emerging market debt in general and the politics they imply. By focusing on so-called deleveraging episodes after crises, this article investigates the shifting boundaries of emerging market debt between the 1980s international debt crisis and the global credit crunch in the late 2000s. In so doing, it traces changes in overall debt composition. It suggests that since the 1980s, emerging market debt has been subjected to four significant trends: it has become disintermediated, domesticised, privatised and individualised. However, these changes have been largely ignored in debates on global governance reform.