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For dozens of developing countries, the financial upheavals of the 1980s have set back economic development by a decade or more. Poverty in those countries have intensified as they struggle under the burden of an enormous external debt. In 1988, more than six years after the onset of the crisis, almost all the debtor countries were still unable to borrow in the international capital markets on normal terms. Moreover, the world financial system has been disrupted by the prospect of widespread defaults on those ...
For dozens of developing countries, the financial upheavals of the 1980s have set back economic development by a decade or more. Poverty in those countries have intensified as they struggle under the burden of an enormous external debt. In 1988, more than six years after the onset of the crisis, almost all the debtor countries were still unable to borrow in the international capital markets on normal terms. Moreover, the world financial system has been disrupted by the prospect of widespread defaults on those debts. Because of the urgency of the present crisis, and because similar crises have recurred intermittently for at least 175 years, it is important to understand the fundamental features of the international macroeconomy and global financial markets that have contributed to this repeated instability.
Developing Country Debt and the World Economy contains nontechnical versions of papers prepared under the auspices of the project on developing country debt, sponsored by the National Bureau of Economic Research. The project focuses on the middle-income developing countries, particularly those in Latin America and East Asia, although many lessons of the study should apply as well to other, poorer debtor countries. The contributors analyze the crisis from two perspectives, that of the international financial system as a whole and that of individual debtor countries.
Studies of eight countries—Argentina, Bolivia, Brazil, Indonesia, Mexico, the Philippines, South Korea, and Turkey—explore the question of why some countries succumbed to serious financial crises while other did not. Each study was prepared by a team of two authors—a U.S.-based research and an economist from the country under study. An additional eight papers approach the problem of developing country debt from a global or "systemic" perspective. The topics they cover include the history of international sovereign lending and previous debt crises, the political factors that contribute to poor economic policies in many debtor nations, the role of commercial banks and the International Monetary Fund during the current crisis, the links between debt in developing countries and economic policies in the industrialized nations, and possible new approaches to the global management of the crisis.
1. Introduction Jeffrey D. Sachs
I. Country Studies
2. Debt and Macroeconomic Instability in Argentina Rudiger Dornbusch and Juan Carlos de Pablo Bolivia
3. Bolivia's Economic Crisis Juan Antonio Morales and Jeffrey D. Sachs Brazil
4. The Macroeconomics of the Brazilian External Debt Eliana A. Cardoso and Albert Fishlow Indonesia
5. The Conduct of Economic Policies in Indonesia and Its Impact on External Debt Wing Thye Woo and Anwar Nasution Korea
6. External Debt and Macroeconomic Performance in South Korea Susan M. Collins and Won-Am Park Mexico
7. Mexico 1958-86: From Stabilizing Development to the Debt Crisis Edward F. Buffie, with the assistance of Allen Sangines Krause Philippines
8. Debt Crisis and Adjustment in the Philippines Robert S. Dohner and Ponciano Intal, Jr.
9. Turkish Experience with Debt: Macroeconomic Policy and Performance Merih Celâsun and Dani Rodrik Remarks on Country Studies Miguel Urrutia Anne O. Krueger
II. Special Topics
History of Debt Crisis
10. How Sovereign Debt Has Worked Peter H. Lindert and Peter J. Morton
11. The U.S. Capital Market and Foreign Lending, 1920-1955
Barry Eichengreen Adjustment Problems in Debtor Countries
12. Structural Adjustment Policies in Highly Indebted Countries Sebastian Edwards
13. The Politics of Stabilization and Structural Adjustment Stephan Haggard and Robert Kaufman
14. Conditionality, Debt Relief, and the Developing Country Debt Crisis Jeffrey D. Sachs The International System
15. Private Capital Flows to Problem Debtors Paul Krugman
16. Debt Problems and the World Macroeconomy Rudiger Dornbusch
17. Resolving the International Debt Crisis Stanley Fischer List of Contributors Name Index Subject Index