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.
Jeffrey D. Sachs is director of The Earth Institute at Columbia University and special adviser to United Nations Secretary-General Ban Ki-moon on the Millenium Development Goals. He is internationally renowned for his work as an economic adviser to governments and international organizations around the world.
Jeffrey D. Sachs I. Country Studies
2. Debt and Macroeconomic Instability in Argentina
Rudiger Dornbusch and Juan Carlos de Pablo
3. Bolivia's Economic Crisis
Juan Antonio Morales and Jeffrey D. Sachs
4. The Macroeconomics of the Brazilian External Debt
Eliana A. Cardoso and Albert Fishlow
5. The Conduct of Economic Policies in Indonesia and Its Impact on External Debt
Wing Thye Woo and Anwar Nasution
6. External Debt and Macroeconomic Performance in South Korea
Susan M. Collins and Won-Am Park
7. Mexico 1958-86: From Stabilizing Development to the Debt Crisis
Edward F. Buffie, with the assistance of Allen Sangines Krause
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
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
Adjustment Problems in Debtor Countries
12. Structural Adjustment Policies in Highly Indebted Countries
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
16. Debt Problems and the World Macroeconomy
17. Resolving the International Debt Crisis
List of Contributors