Formal recognition of Liberia’s sovereignty offered the government the opportunity to borrow on international markets that were growing rapidly during the second half of the nineteenth century. However, like other independent countries, Liberia would often find the terms on which it was able to borrow excessively costly, particularly as compared with colonized countries – a gap described in literature on sovereign debt as the "empire effect." Literature on the "empire effect" has thus far neglected any region of Africa outside of South Africa. This chapter focuses on Liberia’s efforts to borrow, beginning with the first loan the government raised in London in 1871. The terms of this loan were such that the government had little choice but to go into default. After renegotiating with its creditors, the Liberian government tried to return to the market but could only do so under what are described in the literature on sovereign debt as “supersanctions,” or infringements on the sovereignty of the borrowing country as a condition of borrowing. Literature on supersanctions has speculated that they replicated formal colonial rule. By comparing Liberia’s experience to that of British colonies in West Africa, this chapter shows that this was not the case: despite supersanctions which eventually extended the reach of foreign officials to include control over Liberia’s finances and its military, investors overseas neverregarded Liberia as a sound investment.

Chapter 1 begins with a discussion of the early interest of German bankers in the Chinese market, including the failed attempt of the Deutsche Bank to establish branches in East Asia in the 1870s. The chapter then explores the early development of foreign banking in modern China from the middle of the nineteenth century and the growing interest of Chinese reformers and officials in using foreign capital and cooperating with foreign banks. We then return to the German bankers and investigate the activities of a study mission sent to China by a group of German banks and industrial concerns. Finally, the chapter traces the establishment of the Deutsch-Asiatische Bank in China by leading German banks in 1889.

Chapter 3 explores the growing role foreign banks and global capital markets played in Chinese public finance during the 1890s. It does so by focussing on the indemnity loans China issued on foreign bond markets between 1895 and 1898 to repay the war indemnity imposed on China by Japan after the Sino-Japanese War of 1894/5. The chapter shows how increasing competition among foreign financiers and banks involved in China made it possible for China to borrow money cheaply abroad. However, once China’s Customs revenue was used up as a possible security for loans, foreign bankers needed to learn about other Chinese revenue streams and China eventually had to give in to the rules of foreign financial markets when it issued the final indemnity loan. More broadly, the indemnity loans also reflected the growing internationalization of Chinese public finance.

This chapter focuses on the rise and fall of growth and the incidence of recessions in centrally planned socialist regimes in Central and Eastern Europe (CEE) and the former Soviet Union. It studies the period of rapid growth and socialist industrialization in the 1950s and 1960s, the socialist stagnation of the 1970s, and the terminal decade of the 1980s. It discusses the rapid accumulation of foreign debt in convertible currencies in some socialist countries as an attempt to revert symptoms of stagnation and the effect of the debt crises of the early 1980s, with responses ranging from full repayment under extreme self-imposed austerity (in Romania) and attempted rescheduling in other countries. It examines the causes for deep contractions in several CEE countries, Russia, and Ukraine in the early 1990s and the impact of the crisis of 2008–09.