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Leslie Johns 0:03

Welcome, everybody to today's Burkle Center book talk. A few announcements before we begin. Today's webinar is being recorded, but only the speakers are visible and audible. The audience cannot be seen or heard. Both the video and audio recordings will be available on the Burkle Center website, as well as on YouTube and on Apple podcasts. We invite you to submit your questions through the Q&A portal that's located at the bottom of your screens. Also in the chat box, on the right, which is available by accessing the bottom hand of your screen, you should be able to access information about ordering the book. And we'll also be posting a discount code that you can use in order to get a discount off of the book. So today's speaker is Didac Queralt. He received his PhD from New York University, which I have a personal bias and saying is the best PhD program in the world. He's currently an Assistant Professor in the Department of Political Science at Yale University. He is a talented young political economist. And his research examines historical political economy, fiscal institutions, and he examines them from three different angles: through the intersection of war, trade, and external finance. He's already published research articles in a number of different top journals. But today, he's going to be sharing with us research from his first book, which was recently published by Princeton University Press. It's titled Pawned States: State Building in the Era of International Finance. So I'll go ahead and turn things over to Didac.

Didac Queralt 1:58

Thank you very much for the warm presentation. And I agree, NYU offers the best PhD program in the world. So I'm very happy to present my work today. And basically, I want to start the presentation by breaking some news, basically that there is a problem with public debt in the United States. And if you've been reading them the news lately, you will basically have probably learned that we hit the debt ceiling. And now there are negotiations between the presidency and Congress about whether to raise the ceiling. And if that negotiation does not move forward, the United States will default on its sovereign debt for the first time ever. And that will be a big event, not only for the American economy, but also for the entire world. Speaking of the world, the problem of sovereign debt is far from a problem of the United States, it is very normal, or often, problem in the poor countries. And that's because they are relying increasingly more on external finance. On these two charts, that were also drawn from recent news, we see on the left, that external indebtedness of developing nations has actually more than doubled in the last 20 years. And more problematic, on the right chart, is that these countries are having a harder and harder problem to pay back, to service their debt. And some of them are very close to default. And many things, many bad things, usually happens when when countries default. And those things should be, and are actually, of interest to the political science community. There are many interesting questions for the PhD students in the room that we should address as political scientists. What are basically the causes and consequences of default? And in the book...

Leslie Johns 4:15

Didac. I think you need to share your screen with us. I don't think you've put up slides, although I know you're talking about them.

Didac Queralt 4:22

Yes, sorry. Sorry about that.

Here we are.

Yes. So back to where I was. There are important political, political science questions that we need to address when we assess the consequences and causes of default. But in the book that, I'm that, I'm presenting today, I try to address a slightly different question. The first one is, when did the problem of external indebtedness rise? Is it a problem that began 20 years ago? Is it a problem that began 40 years ago? And also, what, what does it mean for domestic sources of revenue? And in particular, what does it mean for taxes? When countries float loans overseas, does taxation increase in order to repay the debt or does it decrease? And if it decreases, what is the risk of falling into a debt trap? The questions to this, this, the answers to these questions make up pawned states. And in the book, which I structure in mainly two big sections, I first unveil and explain the conditions of access to external credit markets over the developing world, and starting as early as 1816. I also examine what are the political dilemmas for sitting incumbents, whether they decide to float loans to fund fiscal shocks or whether they prefer to raise taxes. And basically, I come to the conclusion that most of the times external finance weaken incentives to build tax capacity. So there was a substitution effect between external finance and domestic finance. And I also evaluate the long term effects of early access to external finance. And in the vast majority of cases, I find a negative effect between early access to finance and long run fiscal performance and democratic institutions. So let me walk you through the different parts of the book by starting with the very origins of the globalization of public credit. So this brings us to the early 19th century, to the years after the Napoleonic Wars. So 1816 onwards. This is a period in which newly independent countries and countries that had existed for centuries and millennia but had been traditionally isolated. This is a period in which these countries initiate state building programs that require funds. They need money to build new militaries, to build infrastructure, and eventually to refinance all debt with new debt. And these countries are in Latin America, but not only Latin America. Countries in the Middle East, in the North of Africa and in Southeast Asia are also participants of this early market of international credit. This demand for external finance was easily met in European financial capitals, and in particular, in London, in the London Stock Exchange. And that's because the Industrial Revolution had created a big surplus of capital. And the capitalists, the investors, decided to lend money at a price to these nations that require vast amount amounts of resources. So it's important to remember, for the presentation and for the implications of this early access to capital, that the contracts were private. These were contracts that were signed between European capitalists, private investors, and foreign sovereigns. Most of the lending nowadays is between multilateral organizations and to borrowing countries, that's what we call official lending. But that was not the case in the 19th century. Those contracts were private, went from private hands to public hand. The first, basically, task that I conduct in the book is to understand what were the terms under which these new nations access credit in financial capitals. And for that, I put together an original data set for 92 policies including sovereign states and colonies between 1816 and 1913, involving more than 940 sovereign loans, sovereign bonds. And the main conclusion that I came to is that capital was issued at comparatively cheap terms. There are different ways to look at these or to come to this conclusion. One is to look at what is the average interest rate in the European credit markets before the 19th century, and compare them to the average interest rates to the international credit markets post 1800. And this is basically the figure that you are showing, that you are seeing on your screens. What we see here is that the average interest rate declined over centuries in Western Europe. And it continued once the new participants in international credit markets joined the capital markets. And this is already puzzling because many of these new borrowers were countries with weak economic fundamentals with high political instability, and also without any reputation in international markets. Another way to look at, basically, the conditions under which new borrowers access their capital in European markets, is by comparing the average interest rate of bonds floated by European countries, those that have been floating loans for 700 years, to non-European countries, to countries in the, so called, global periphery. What we see is that the difference in the interest rate between these two groups was under 100 basis points, which is a very small difference for historical, for historical standards, but also for modern standards. And what is even more puzzling is that the spread between, that is the difference in the interest rate, between these two countries vanished in the last decades of the 19th century. And in case you wonder, the results hold when we look at the effective interest rates. So we should not be particularly surprised to know that many of these countries in the Global South defaulted. And basically they stopped paying or servicing debt when when they were supposed to. And this is not something that I unveiled, this is very well documented in 2009. So the puzzle is why European investors, in particular, in particular British investors, were willing to lend to countries that had a high probability of default. To answer this question, I had advanced the the notion of extreme conditionality, which was the practice of collateralizing, or asking borrowing countries, to collateralize, to pledge, public assets in order to access fresh capital, under the understanding that in case of default, the bondholders, the investors, would foreclose the collateral and run it and manage it until the debt was liquidated. So you might be wondering, what were these pledges? What was collateralized, and foreclosed? So I classify those assets into big categories. These were branches of the tax administration. And those bond assets happen in big countries like China, in smaller countries in Europe, in smaller countries in Latin America, and basically everywhere in the world. And another type of asset that that was foreclosed were state monopolies. Basically, these were their main sources of revenue in the Global South. And we find examples of these foreclosure in countries like Bulgaria, El Salvador, Paraguay, Portugal. So this was really frequent event. At this point, we need to address two questions. The first one is why incumbents in the Global South were willing to accept extreme conditionality. And also what was the enforcement mechanism of extreme conditionality. So let me walk you through the main ideas behind these two behind these two questions. So first of all, we all agree that pledging public assets was highly unpopular already in the 19th century. And there are examples of presidents trying to hide it from the press and to hide it from the parliaments. And actually they were not obliged to issue loans and pledge their assets. And there are examples of that in Ethiopia and in Thailand, then Siam, and those are examples of cases in which the sitting rulers were afraid of the consequences of default because they were seeing what was happening happening in in other countries, and they decided to invest instead in their tax, in building tax capacity. But we need to understand that the costs, we need to understand the costs of the alternative to external finance, and those are basically that investing in tax capacity, in building Professional Tax Administration, in centralizing and standardizing the weights and measures across the territory is costly is, is very invested exercise that consumes a lot of resources, resources in countries that already had problems to basically get to the end of the month. And depending on initial conditions resorting on taxation could basically involve the mobilization of taxpayers and granting them political rights, the notion of no taxation without representation. So once we assess the advantages and disadvantages of external finance and loans, we basically end up with with a simple prediction, which is summarized, is articulated actually, in the second chapter of the book, which is basically that incumbents in countries with high political instability, incumbents in countries with loose executive constraints, you can think of authoritarian countries, and countries with initial weak fiscal capacity, were those that were more likely to prefer external finance over local taxation. So basically, the take away of this discussion is that countries with poor initial conditions were the ones that were more willing to pledge their assets, and then end up with a poor fiscal policy. The second important question that we need to address is, what was the enforcement mechanism of these private contracts in international markets, or to put it in different words, why conditionality was credible? And what I argue in this first chapter of the book is that, basically, in the last decades of the of the 19th century, bondholders, in particular in Britain, gain the the ability to enforce conditionality, because three things, three conditions were met. First one is that they organized, they overcame coordination problems by creating the Cooperation of Foreign Bondholders. This was what nowadays we would call a lobby, a lobby that basically specializes in negotiating with countries default. But also specialized in lobbying the British government for diplomatic assistance. So they were basically trying to bring the British government to the table in order to extract these concessions from the borrowers. The second condition is that this is a time in which there was a significant elite replacement within the British government. So the second half of the 19th century makes very clear that land is no longer the main source of wealth in Great Britain. It is the industry, it is basically the Industrial Revolution. And that basically leaves the London aristocracy with few options, and they decide to switch sectors and the two sectors that they reallocate to are banking, and the other one is the executive branch of the British government. So by occupying these positions, basically what we find is a natural or quasi-natural alignment between the interest of finance and the national interest. And this has to be added to the third condition, which is the context of imperial competition between Britain, France and Germany. France and Germany were very open about using external finance as an imperial tool. That was not the case for the British government. But at some point, they realized that because two thirds of their wealth, of all British capital, was invested overseas, they had to do something. They had to contract the French and German intervention in international credit markets. So, maybe reluctantly, the British government decided to participate in these default negotiations and to weather with condition, to unconditioned one turned conditionality, this extreme conditionality, credible. So, in addition to some qualitative evidence, to validate this mechanism, I also run large statistical analysis in which I regressed the presence of specific pledges in the loan contracts on the interest rate associated with those contracts. And for that I had to hand code over 700 loan prospectuses and basically differentiate what type of pledges were collateralized. And the main result of the statistical test, which basically relies on two-way fixed effects is that the presence of a pledge reduces the premium of the paid by borrowing country, and this basically grants credibility to, basically, the extreme conditionality mechanism. So this second part of the book is about what are the consequences for state building of having, basically, early access to external finance. And in order to summarize, the basically five chapters of the book, let me introduce this diagram to, basically, elaborate on on the second part of the book. So here think of a fiscal shock. And basically, war comes to mind as being the paramount example. Rulers have to finance a war and they have three options, they might tax, they may issue domestic debt, or they may rely on external debt. So if we focus on the first two parts, tax and domestic debt, those are basically, the paths I denote as path A and B, those were the paths that most Western European countries followed before the first globalization of international capital in the 19th century. So those were the paths that if you have, if you read Tilly, Charles, the work of Charles Tilly, for instance, or the work of Norton Guang Gus or David Stasavage, those are the paths that these European nations were following before this globalization of public credit. What is important is to understand that either taxation or domestic debt puts in motion political mechanisms by which those that lend to the crown or those that pay taxes can hold the ruler accountable. If the ruler doesn't use the tax money or the debt in a proper way, responsibly, the taxpayers and the lenders can basically choose another ruler. That's basically why we associate the rise of taxation and the rise of domestic debt to power shedding institutions and also state building, because in anticipation, rulers invested in the tax administration in the country in order to prepay the war debt. Now, what happens in the 19th century, what happens is that this additional path comes to exist, the path of external debt, and three things could happen once they relied on international finance to finance, to fund, fiscal shock. Countries might tax after war, and basically close the circle and end up in state building. That would be a clean contract. And basically, Japan comes to mind in order to illustrate policy. Or they might negotiate with borrowers after default, and maybe some haircut and some conditions to extend the time that they can repay. And eventually, they will make a fiscal effort to collect enough taxes and pay back the debt. That's the path B, which I associate with the IMF these days, with the work of the IMF, but in the 19th century, because of the international context, but it was also a possibility that is the swap between domestic sources of revenue, domestic monopolies and branches of the tax administration for all debt. And because the main sources of revenue were put in hands of international investors, there was no building in the state. Actually, it was the opposite because countries needed to go back to international capital to international trade markets, they had to collateralize new assets, and because the tax base had narrowed, they were more likely to default and basically fall back into this narrative cycle of state debt. So the second part of the book shows some evidence based on on vignettes that basically are associated with each of these parts. It also shows examples, sorry, also includes large chain, statistical analysis for the short and long run effects of early access to capital. And basically, it shows that the way that war was funded in the 19th century affected fiscal institutions in the 19th century, and all the way until the present. And he also elaborates on the mechanisms of transmission meaning, the reasons why early fiscal decisions affect fiscal capacity in the present day. And I'm really happy to tell you about that in the Q&A. But because I'm running out of time, I prefer to wrap up the presentation by sharing with you my interpretation of external finance, which is not very positive nor very negative. What pawned states try to do, is to offer a cautionary tale about the opportunities but also the risks associated with financing government overseas. Now, you might want to know, what are the implications for today? So importantly, extreme conditionality is no longer a possibility. After World War I, the international context changed dramatically. Happy to tell you more in the Q&A. So extreme conditionality does not apply in the present day. But we should tell still about it, because it helped us to understand why weak states exists today, and is one of the causes of weak states in the developing world today. Now, I'm happy to tell you more about what, how I interpret this. How can we use the lessons of pawned states to basically validate the skeptic claims about foreign financial control, basically, involve the same type of dilemmas for state building that we are seeing today in in the developing world. It is very hard to build states by foreigners unless basically, the agents inside the polity to come to believe that they all benefit from a stronger state, it is very hard for them to build a state. And just let me end by saying that what Pawned States tells us is that when we talk about the oil curse, or the more basically, generally, the easy money curse, we should not only think about oil, and aid, we should also incorporate external finance, because at the end of the day, it distorts political accountability in very similar ways. And with that, I'm going to leave it here, and I'm really happy to address your questions. Thank you.

Leslie Johns 27:54

Wonderful, thanks so much, Didac. Wonderful. Do you maybe want to unshare your screen, then maybe it'll take us back to the normal presentation mode. Okay. So I imagine that based upon, first of all, for everyone in the, in the audience who's our guest today, just a reminder, if you want to go ahead and submit responses or questions, just go ahead and push the Q&A button at the bottom of your screen. It'll go into sort of a box so that I can see the responses coming in. Based on the ones that have come in so far, I imagine that most of the questions that that will be sort of fielding in our discussion will relate to sort of the the implications of detox argument and evidence for the contemporary world. So it's just sort of a heads up for you Didac. But I do want to ask you a little bit about your last slide and your notion of, you said, extreme conditionality no longer applies after World War I. Because, you know, obviously, you know, I've read a little bit about the 19th century. I'm not a Didac Queralt, but, you know, the thing that that those examples bring to mind so much for me is when I'm reading today about China's Belt and Road Initiative. What is so striking to me about reading about that particular aspect of modern debt contracts, is the way in which China has been systematically structuring its debt contracts, is that it is explicitly making these infrastructure loans conditional on pledges of things like ports and harbors such that if these infrastructure loans aren't paid back by the developing states, that China is is claiming that that they are going to be given access over portions of sovereign territory in these states. So is that not sort of a resurgence of this idea of extreme conditionality? I know it hasn't been fully realized yet. But it seems like that's what's really causing a lot of concerns about the Belt and Road Initiative is this idea of extreme conditionality coming back now?

Didac Queralt 30:29

Yes, yes, I agree that there are many things that we see on the news that resonates with the argument that I make in the book. Now, I'm open to the possibility that what China is doing to countries in the Global South was similar to what European nations were doing to China in the late 19th century and early 20th century, which would be kind of ironic. Now, being open to the to the idea, I intentionally avoided strong claim in the book. Because if we've learned anything about these contracts, is that there is a lot of opacity, right? So there is this super interesting report by Anna Gelpern and co authors, titled, a look at 100 Chinese loans, very close to that or very close to that, that basically, the main conclusion is that we don't really know what's going on. Right. So until, until we'll learn, I mean, the fact that those contracts are so opaque is not a good sign to begin to begin to begin with. But I think that it's a little premature to come to this conclusion. I think that more research has to be done. And, and basically that we still don't know. It can be the case, that history is repeating. But I, we don't have enough evidence, in my opinion, to to make a very strong case. That's important.

Leslie Johns 32:24

Yeah, of course, we should acknowledge, you know, this is largely sort of bait based on journalistic reporting. To my knowledge, I don't know that anyone's ever actually seen the text of any of these contracts. Right? Yeah, this, these are largely based on journalistic reports. Okay, so we've gotten a lot of questions in from our audience, I'm going to do my best, I don't know that I will necessarily present these in a logical orders. So from one of the graduate students in our audience, Are there cases where the indebted country refused to allow the debt holder to collateralize the debt? Like if the UK was supposed to take over a monopoly in an indebted state, but the state refused? Were there examples of sort of resistance where whereby state sort of pushed back? I mean, I know there were definitely uses of force by Europeans. Right to collect on the loans. That's right.

Didac Queralt 33:23

That's true. So that's, yes. So I just want to clarify that it wasn't the British government, which take took control of the assets. This was the private investors, but they had the help of the of the, of the British government. So that's why I'm emphasizing at the very beginning that these were these were private contracts. Just to keep like things as as clear as possible. Now. Yes, there are examples: Venezuela. There are examples: Egypt. There are examples: Mexico. Even, even the Ottoman Empire in which there was basically a clear, clear expression of force. And, and, and we should acknowledge them. Now. Gunboat diplomacy, that's how it's referred to in the literature was exceptional. And some authors come to the conclusion that because it's happened, rarely. This idea that the British government would step in and help investors is not valid. My interpretation is the opposite, that these episodes are off equilibrium path results. So when things didn't work, as expected, that's when we see gunboat diplomacy.

Leslie Johns 34:46

But you're not you're not buying sort of the Mike Tom's story.

Didac Queralt 34:50

I see too many examples in the literature, in the historical literature to get to claim that gunboat diplomacy means that there was no conditionality.

Leslie Johns 35:05

Yeah. Okay. One of our guests asked if you could elaborate more on your point about geopolitical conditions terminating the practice of extreme conditionality after World War One. What do you mean by that? Yeah.

Didac Queralt 35:21

Yes. So this is basically with the like two major changes. The first one is the Drago doctrine. Drago was the Ministry of Finance of Argentina. And he was involved in the renegotiation of debt in the early 19th century. And basically, he was also a scholar and he basically make the case and appeal to other developing nations in the world right before World War One, that gunboat diplomacy, and the coercion exerted by European powers could not, should not be the way to resolve that disputes. And basically.

Leslie Johns 36:06

But you also have the Calvo Doctrine competing at the same time. I don't know if I'm believing that Didac. I mean, yes. I agree that Drago existed, but I also agree that not everyone agreed with him, right? Yes, yes. But I'll give you half a point on that one.

Didac Queralt 36:25

This the second okay, good. The second one, is, brings us to the 1970s. And basically, at that time, the the courts in the States and also in the UK, basically relaxed the idea of absolute sovereign immunity, meaning that they would be willing to accept, they would accept cases in which the investors have defaulted bonds sued sovereign nations, right. And that's basically it offers a legal channel, a non coercive channel to resolve these these episodes. Yes. Let's also also importantly, we might have seen a very different scenario after World War One. If external finance was as big as it was before World War One. What we see is that after World War One, the international credit markets go back to not to zero. But basically, they do not operate at the same scale, as they did before World War One until the late 70s. So we have the 60 years in with this. So the counterfactual is kind of yes, I agree with you that I have only half a point. But I just go I just want to go for a quarter more of a point. I think that the counterfactual is not super clear, because many things change at the same time.

Leslie Johns 37:48

Yeah, of course. And then you have the you have you have all kinds of you know, development aid. I mean, states are financing through different means, right? They're not necessarily you know, they're going through different channels. You know, they're not necessarily going to external debt through private markets. Yeah. So anyway, I love you for sticking up for Drago, though. I mean, not a lot of people even learn his name, right. Like I see so many books that just go with Calvo, they don't even mention Draco. So good for you. Yeah, I love that. Okay. So a question from Art Stein. The argument about the credibility of extreme conditionality is a late 19th century story. But the role of external finance was seen throughout the century and had no state enforcement behind it. And that should not have been credible. So what explains the early part of the of the 19th century?

Didac Queralt 38:43

Well, what what we see two things, two things happen. One, we don't see pledges, having any effect on the price of credit before these conditions before the creation of the corporation of foreign bondholders. That's, that's one thing. So and the other one is that we also see a rise in collateralization after 1960s. So it's, you see it growing so much. I mean, that's basically why uses some extra amount of finance in the first half of the 19th century, but it grows over time. And the point of the book is that it grows because they solve this credibility problem. So the investors feel more confident that they are going to recover their investment.

Leslie Johns 39:34

Yeah, incorporation for foreign bondholders, that's 1868 ish. Right around there. Okay. Okay. Yes. So do you believe that the current international financing market maintains imperialist legacies? And what controls if any are necessary to combat this dynamic? Well, I mean, that's a big question that anyone can answer that's like that's like, you know, a lifetime's work? That's a really big question. And one of our guests is asking, you.

Didac Queralt 39:34

No, yeah it makes sense, I understand where it comes from. So we will need to define what the imperialism aspect means. But what I want to clarify, so there is this fantastic book by Jonah Sponte, who basically documents the type of lenders in nowadays, credit markets. And there is this figure in the early maybe the first half second chapter that shows that less than 10%, of sovereign of lending to countries nowadays, is purely private. So there are there is a lot of official official lending, and lending that is both official and private. So basically, you have official institution, multilateral institutions, and banks acting together and lending together. And I want to believe that the conditions in the new international credit market are more or less interested in the favor of recovering the investment and give way more weight to building capacity in order to repay the debt.

Leslie Johns 41:29

Okay, okay.

So, I guess one thing, this is coming up in some of the questions, and it's also sort of a question that that I had, when I was reading the book, is it was often sort of presented in the book, this idea that there was sort of like this fiscal shock like this, like, oh, war comes along, and you're just sort of presented with this pressing need for money. And you kind of have to choose like, am I going to tax? Am I going to, you know, sort of go through domestic debt? Or am I going to go through external debt? But, but, and I know, this is asking you to step outside of your theoretical framework. But are there all sorts of alternatives for countries to sort of avoid the consequences of easy and early foreign finance? You know, isn't it a little bit artificial to sort of think that that, you know, you know, oh, you just have sort of like the sudden need for like money that must be burned, right? Because it's, it wasn't really sort of an option within this framework to like, Oh, I'm going to, I'm going to take out a loan, and I'm going to use it to grow my economy, right. There was never sort of this, at least within the conceptual framework that you presented that like, I'm going to take external finance, or I'm going to take domestic debt, and I'm going to use it for productive purpose, right, there was really an opportunity for growth. So obviously, that introduces a more complicating factor within your model. Right. But it also creates new opportunities for these states right, the potential to use debt responsibly. So right, how does that complicate the story? Yeah.

Didac Queralt 43:27

Yes, yes. So one of the aspects that I articulated in the in the in chapter two is that that world in which country manages external funds responsibly, is more likely to happen when you have power sharing institutions, basically, that hold the ruler accountable. And in situations in which you have strong tax capacity, in the sense that you know, for certain that you will be able to repay, because basically, that simplifies things, and then you can spend your time thinking in how I grow the economy. Right. Now, my main disagreement with like, my main disagreement with economic historian studying external finance in the 19th century is in the role of railroads, which was basically the big developmental finance at the time. There are a few, a few examples that railroads show up to grow economies that are the case of Mexico, the case of Argentina, and the case of Brazil are usually offered as examples of that. But the problem and here and also quoting the work of other economic historians is that those investments grew the economies basically cost economic growth, but also economic under development. In the sense that these infrastructure were built not to create domestic markets, not in a rational way in which you would basically overcome market failures. But those investments, you often prioritize extractive industries. So basically, at the end of the day, you had railroads, which otherwise sounds like a good investment that were used to extract resources from a countries and bring them to Western Europe. The worst case is not only that is that many railroads were actually foreclosed by international investors. And the that meant that they had very little incentives in maintaining the lines. So many of the railroads shut down after they had liquidated the debt. And basically, they left behind an infrastructure that did not work. So it is hard sometimes to condition to basically to find any positive legacy of that investment in the development of finance in the 19th century.

Leslie Johns 46:06

Okay, okay. Mean, meaning you're saying that even though meaning your argument is, is that this money, you would say what would do was not invested in a productive way? And that it was just sort of sunk and did not generate productive revenues? I'm sorry, I don't know understand what you're arguing. Yeah. Yeah.

Didac Queralt 46:30

So, so let me for instance, bring like the case of Spain. So the railroads, most, most of so there were some early railroads that were were well planned. Because they were meant to unify the market. But those were the exception, most of the later railroads were lines that connected extraction sites to ports. Okay. So if you if you basically, that didn't generate any market. That didn't, that didn't connect any market, those were basically expressions of extractive investment. So you could count it as growing the economy, it grew the GDP, but basically, it distorted the entire economy. Because rather than investing in, in sustainable economic growth, basically, those railroads are basically attracted resources for the growth of very narrow economies, that at the end of the day, were computed or basically fill the pockets of international investors. That's, that's why that's this idea that, yes, you can grow the economy, but at the same time, you can cause other developments.

Leslie Johns 47:55

I see. Okay, okay. Okay. Very good. And I guess we have about 10 minutes left. So, since we have a lot of graduate students I know who are attending today's talk, I guess, I wonder, you know, if you have any sort of general advice you might share to them. In terms of, you know, I think you're sort of, you know, a relatively young academic, very early in your career. And I was wondering if you had any advice to them to share in terms of, you know, doing work that crosses disciplinary barriers. I think you're a great example of someone who was trained as a political scientist who, obviously, does work on economics, does work from a historical angle. I was wondering if you had any advice to share to them in terms of, you know, speaking to multiple disciplines, you know, trying to satisfy multiple constituencies issues like that.

Didac Queralt 48:56

Well don't do it. It's, it's, it's hard. It's hard. Yes. Sometimes I, I think why I didn't just why didn't I just take a simpler route.

Leslie Johns 49:17

Well, for the graduate students, Didac, you've, you've had a bit more of a circuitous path. I'll share that, like, you did a couple of postdocs, right. You've been like a visitor at a couple of different universities. You've worked in Spain, like, like you've traveled quite a bit. You've had a you've had a challenging path. I think it's fair to say, right?

Didac Queralt 49:41

Yes, Yes, I went back.

Leslie Johns 49:42

So straight from NYU to Yale

Didac Queralt 49:45

No, I worked hard at this. This is the book is not my dissertation. The dissertation came out as basically in the form of papers and it relates to trade, not to finance. So, I mean, I'm joking I, in the sense that trying to trying to speak to different disciplines is challenging. It is, it is exciting because you learn things that you were not exposed to during grad school. But, but it's not it's not the it's not the easiest, it's not the easiest path. And at the end of the day, you you might be perceived as an outsider when, when you try to speak to economic historian, so that's, that's why it's hard. But at the same time, and this is the advice that I give to everybody doing a PhD, no matter the research question, I think that people should focus on on topics that they feel passionate about. Because that's, that's the only way to move forward. Grad school and the profession is getting more and more competitive. It's is I mean the standards are rising every year. And it requires to put a lot of of effort. So you better like what you do. I wouldn't chase facts. I would, I would, I would chase interests and some some interests are easier to implement, others are harder. And in my case, I would have not been able to write this book, right after completing my PhD. It's, it's it's a project that took me a little longer than that. But at the end of the day, and I'm happy with the outcome, but it wasn't it wasn't a piece of cake. It wasn't to me, maybe it is for other people. But it wasn't for me.

Leslie Johns 51:44

Well, I think it was an effort well worth making. I certainly enjoyed reading it. I have it right here beside me again. Again, for those of us who may have joined us a few minutes late, if you go to the chat box, you can access the books website, and Didac was was generous enough to contact the publisher and provide us with a discount code that you can access through the chat box. So please feel free to use that and get a discount. Thank you so much, Didac for joining us today and sharing your research with us. Thank you to everyone in the audience for coming and joining us for another Burkle book talk and we look forward to seeing you again when our next author joins us. Goodbye, everybody. Bye

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