Chapter 4 employs an originally constructed data set, the China Global Finance Index, to conduct cross-national tests spanning eighteen Latin American countries from 1990 to 2017. The index characterizes Chinese policy loans by their ?nancing channel (state-to-state vs. market-based) for each national-level investment project.The chapter ?nds that China’s state-to-state loans, as a share of a country’s external public debt, are positively correlated with budget de?cits, supporting the primary hypothesis that China’s patient capital expands governments’ ?scal policy space. In exchange for this lack of policy conditionality, however, policymakers tend to have more extensive commercial conditionality. Notably, when Chinese ?nancing is instead directly booked with corporate enterprises through private procurement in the marketplace, these commercial conditions are less extensive. China’s patient capital behaves more like long-term equity capital given the underlying private sector competition promoted by domestic procurement laws. National governments do not gain additional ?scal space and are more likely to comply with policy conditionality.

The introduction summarizes some of the main issues and findings covered in the book. The first section relates this volume to its two predecessors, arguing that while the last two decades signaled the fulfillment of many of the hopes raised in the previous volumes, the economy still suffers from many of the maladies highlighted in them, including low levels of productivity and high levels of inequality. Section 1.2 is concerned with the background to local economic developments, including the massive immigration wave of the 1990s and fluctuations in the conflict with the Palestinians and in the global economy. Section 1.3 discusses the reduction in government expenditures and taxes and the reaction of monetary policy to the global financial crisis. Section 1.4 summarizes the main structural reforms aiming to reduce government intervention and increase business sector competition, as well as the attempt to reduce economy-wide concentration. Section 1.5 focuses on economic growth and its determinants: changes in employment, physical and human capital, and productivity. The final section highlights two issues: (a) the improvement of Israel’s level of economic freedom and its position relative to other rich countries and (b) the increase of inequality in income and the deterioration of social services.