Reframing development and accountability: the influence of sovereign credit ratings on policy making in developing countries

At a time of increased financial volatility, understanding ‘development’ requires that we trace spheres of accountability in order to detect the consequences of shifts in power structures from the public to the private sectors, especially. By focusing on the business of sovereign credit ratings, I argue that ratings have been particularly influential in this context not only because of their function as a benchmark for private investment, but because they now also enter into the calculations of policy makers in developing countries who are increasingly compelled to implement policies that reduce their countries' sovereign risk at possibly high costs for sustained economic growth. I explain that governments' eagerness to signal their potential as reliable capital recipients allows for credit ratings to become a powerful site of governance. This outcome is not justified by the quality of rating agencies' output, but by the subjective power of the notion of risk in a crisis prone environment that shifts accountability—through this disproportional influence of credit rating agencies—from the public to the private realm. The Argentine crisis of 2001 is presented here as a case study that illustrates these dynamics.