Much scholarly attention has been paid to how great powers have used development finance as a tool for projecting power and shaping the international order, with less given to how smaller countries navigate these dynamics. This article investigates the conditions under which Latin American countries borrow from institutions led by the declining hegemon, the United States, or the rising power, China. Specifically, it uses mixed methods to analyze 518 loans from the World Bank and Chinese banks, and interviews with policymakers in Ecuador to highlight the mechanisms of decisions, outline interactions between different factors, and identify factors that cannot be readily tested statistically. Results show that countries are diversifying their development finance between the two great powers, motivated by domestic political considerations such as party ideology and economic development priorities, as well as by international structures including the balance of power and the borrowing country’s foreign policy alignment with the United States.
