Global Credit Cycles & Growth in Emerging Markets: The Role of Network Position

• In Event: Credit Cycles, Inequality and Populism

Abstract

Economists who study national credit and financial cycles are increasingly uncovering evidence that these cycles produce spillover effects for economic partners, especially from larger and more central economies to smaller economic partners (Strohsal, Proano, and Walters 2017). Political economists have also turned their attention to the structural determinants of these spillover effects, examining how patterns of asymmetric interdependence can constrain the economic choices that national actors can make, according to where within the structure they exist (Bauerle et al 2017; Ba 2018). We are now finally beginning to understand the dynamics of interdependence and the implications of these dynamics for national power and agency. This paper further advances our understanding of how credit cycles in developed countries affect the economies of smaller economies by examining the how these cycles interact with the structure of the international economy to either slow or enhance economic growth in less developed countries. Specifically, we measure the network proximity of developed and developing countries since 1975 based on the international trade network, and analyze the relationship between advanced economies' credit and financial cycles and emerging economies’ GDP growth, paying particular attention to how investment flows are sensitive to network proximity.

Authors

• William Kindred Winecoff, Indiana University

• Heather Ba, University of Missouri