Comment on ‘Cross-border emerging market lending’ by Peter Aerni and Georg Junge

Abstract

As capital reflows to the developing world in general, and to Latin America in particular, the big question is are these countries reaping rewards for all their gains in liberalizing their economies or are we witnessing a rebuilding on a flood plain? This paper offers an cogent if perhaps optimistic overview of the issues, reviewing the basic empirical facts and theoretical considerations.¹ Though generally careful, the paper sometimes slips into lumping all emerging markets together, which perhaps masks some important issues. The problems in Africa are quite different from those of Latin America, and the fast-growing countries of Asia face very different obstacles from those confronting the debt-crisis countries. I will focus my remarks on Latin America, since that region appears to be the locus of the most dramatic swings in investor sentiment.