Forms of External Capital, Sovereignty and Economic Development in Latin America

Latin American governments increasingly want to attract external capital to increase economic growth and adjust to external shocks. However, their concurrent desire to retain national sovereignty has frequently conflicted with the aim of creditors to receive payment for providing this capital. First, this paper examines how the participation of official and private sector actors, ability of these actors to coordinate their actions, form and maturity structure of external capital and existing political and international monetary environment have influenced the conditions demanded by creditors and the willingness of Latin American governments to accept constraints on national sovereignty during episodes of capital inflows since independence in the 1820s. Second, we investigate how the changing nature of creditor demands, new forms of capital inflows, implicit government guarantees and international monetary environment since 1990 influence the constraints placed on policy makers in the aftermath of the Mexican crisis