Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • fall 2010
  • Article
  • Law and Contemporary Problems

Lawsuits and Empire: On the Enforcement of Sovereign Debt in Latin America

By: Faisal Z. Ahmed, Laura Alfaro and Noel Maurer
  • Format:Print
ShareBar

Abstract

The re-occurring phenomenon of sovereign default has prompted an enormous theoretical and empirical literature. Most of this research has focused on why countries ever chose to pay their debts (or why private creditors ever expected repayment). The problem originates from the fact that repayment incentives for sovereign debts are minimal since little can be used as collateral and the ability of a court to force a sovereign entity to comply has been extremely limited, especially given the lack of a supranational legal authority capable of enforcing contracts across borders. In this paper we contrast the market reaction to attempts to enforce sovereign debt contracts via U.S. "dollar diplomacy" in Latin America in the pre-World War II period and by legal action in the 1990s and early 2000s. We argue that dollar diplomacy created an effective and credible enforcement regime while legal actions by creditors, conversely, do not appear to have done so.

Keywords

Lawsuits and Litigation; Insolvency and Bankruptcy; Sovereign Finance; Borrowing and Debt; Debt Securities; Motivation and Incentives; Markets; Equity; Banking Industry; Latin America

Citation

Ahmed, Faisal Z., Laura Alfaro, and Noel Maurer. "Lawsuits and Empire: On the Enforcement of Sovereign Debt in Latin America." Law and Contemporary Problems 73, no. 4 (fall 2010).
  • Find it at Harvard

About The Author

Laura Alfaro

General Management
→More Publications

More from the Authors

    • February 2023
    • Faculty Research

    Doing Business in Boston, Massachusetts

    By: Laura Alfaro, Leonard A. Schlesinger and Zeke Gillman
    • September 2022
    • Management Science

    Health Externalities and Policy: The Role of Social Preferences

    By: Laura Alfaro, Ester Faia, Nora Lamersdorf and Farzad Saidi
    • July 2022
    • Faculty Research

    FIELD Immersion 2022: Lawrence, Massachusetts

    By: Laura Alfaro and Tom Quinn
More from the Authors
  • Doing Business in Boston, Massachusetts By: Laura Alfaro, Leonard A. Schlesinger and Zeke Gillman
  • Health Externalities and Policy: The Role of Social Preferences By: Laura Alfaro, Ester Faia, Nora Lamersdorf and Farzad Saidi
  • FIELD Immersion 2022: Lawrence, Massachusetts By: Laura Alfaro and Tom Quinn
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College