No sovereign nation should be borrowing from anywhere other than itself.
Instead firms should be selling equity denominated in the local currency for foreign currency - where they need foreign imported capital equipment. If nobody wants to invest on those terms then you have to build the equipment yourself.
For a nation to develop successfully it needs patient money, not hot money.
I find it weird. Nobody would listen to me pontificating about how to design a microkernel and talking about "the problem with programmers".
Because if that country wants to sell their stuff to you, that would their only option - other than taking Rupiyah directly.
And if your country doesn't do it, then some other country will - because new sources of demand don't come by every day.
That's how you avoid a 'debt trap' and the debt prison that comes from countries not being able to go bankrupt.
And as Steve Keen regularly says you are better off studying System Dynamics than economics. It has more application to the real world.
Loans are patient money. As long as the borrower pays as agreed then they can do as they please. Whether the original lender holds the asset to maturity or sells it on to another investor makes no difference.
Most of the high profile failures with foreign investment stem from corruption and incompetence. Switching from debt to equity won't cure that.
It could change who gets left holding the bag, though.
Presumably if Chinese firms held equity in the hydroelectric plants, they would care about whether they were built correctly and won't collapse. As it stands they get paid either way (according to the article).
That's not patient money then is it. That's money that requires regular service - mostly in a foreign currency.
Patient money gets paid as and when there is profit to service it.
Economists don't only study interest rate and banking?
Noah Smith isn't even an economist, he's just some know-it-all internet pundit who happened to have graduated in economics a decade ago.
From his own words[1]:
> Back in 2006, the original reason I thought of getting an econ PhD was actually to become an econ pundit and writer.
If anything, he's a former economist (until 2016) who's now a pundit discussing many topics going way beyond his academic expertise (hence my “know-it all” moniker above).
[1]: http://noahpinionblog.blogspot.com/2016/04/life-update-leavi...