Latin American Debt and the Adjustment Crisis

374 Pages·1987·26.01 MB·English

by  Rosemary Thorp

ST ANTONY'S/MACMILLAN SERIES
General editors: Archie Brown (1978-85) and Rosemary Thorp (1985- ), both Fellows of
St Antony's College, Oxford
Roy Allison FINLAND'S RELATIONS WITH THE SOVIET UNION, 1944-84
Said Amir Arjomand (editor) FROM NATIONALISM TO REVOLUTIONARY
ISLAM
Anders Aslund PRIVATE ENTERPRISE IN EASTERN EUROPE
Orner Bartov THE EASTERN FRONT, 1941--45, GERMAN TROOPS AND THE
BARBARISA TION OF WARFARE
Archie Brown (editor) POLITICAL CULTURE AND COMMUNIST STUDIES
Archie Brown (editor) POLITICAL LEADERSHIP AND THE SOVIET UNION
Archie Brown and Michael Kaser (editors) SOVIET POLICY FOR THE 1980s
S. B. Burman CHIEFDOM POLITICS AND ALIEN LAW
Renfrew Christie ELECTRICITY, INDUSTRY AND CLASS IN SOUTH AFRICA
Robert 0. Collins and Francis M. Deng (editors) THE BRITISH IN THE SUDAN
1898-1956
Wilhelm Deist THE WEHRMACHT AND GERMAN REARMAMENT
Guido di Tella ARGENTINA UNDER PERON, 1973-76
Guido di Tella and D. C. M. Platt (editors) THE POLITICAL ECONOMY OF
ARGENTINA 188~1946
Simon Duke US DEFENCE BASES IN THE UNITED KINGDOM
Julius A. Elias PLATO'S DEFENCE OF POETRY
Ricardo Ffrench-Davis and Ernesto Tironi (editors) LATIN AMERICA AND THE
NEW INTERNATIONAL ECONOMIC ORDER
David Footman ANTONIN BESSE OF ADEN
Bohdan Harasymiw POLITICAL ELITE RECRUITMENT IN THE SOVIET UNION
Neil Harding (editor) THE STATE IN SOCIALIST SOCIETY
Richard Holt SPORT AND SOCIETY IN MODERN FRANCE
Albert Hourani EUROPE AND THE MIDDLE EAST
Albert Hourani THE EMERGENCE OF THE MODERN MIDDLE EAST
J. R. Jennings GEORGES SOREL
A. Kemp-Welch (translator) THE BIRTH OF SOLIDARITY
Paul Kennedy and Anthony Nicholls (editors) NATIONALIST AND RACIALIST
MOVEMENTS IN BRITAIN AND GERMANY BEFORE 1914
Richard Kindersley (editor) IN SEARCH OF EUROCOMMUNISM
Bohdan Krawchenko SOCIAL CHANGE AND NATIONAL CONSCIOUSNESS IN
TWENTIETH-CENTURY UKRAINE
Gisela C. Lebzelter POLITICAL ANTI-SEMITISM IN ENGLAND, 1918-1939
Nancy Lubin LABOUR AND NATIONALITY IN SOVIET CENTRAL ASIA
C. A. MacDonald THE UNITED STATES, BRITAIN AND APPEASEMENT,
1936--39
Robert H. McNeal TSAR AND COSSACK, 1855-1914
David Nicholls HAITI IN CARIBBEAN CONTEXT
Patrick O'Brien (editor) RAILWAYS AND THE ECONOMIC DEVELOPMENT OF
WESTERN EUROPE, 183~1914
Amii Omara-Otunnu POLITICS AND THE MILITARY IN UGANDA, 1890-1985
Roger Owen (editor) STUDIES IN THE ECONOMIC AND SOCIAL HISTORY OF
PALESTINE IN THE NINETEENTH AND TWENTIETH CENTURIES
D. C. M. Platt and Guido di Tella (editors) ARGENTINA, AUSTRALIA AND
CANADA: STUDIES IN COMPARATIVE DEVELOPMENT, 187~1965
Irena Powell WRITERS AND SOCIETY IN MODERN JAPAN
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Marilyn Rueschemeyer PROFESSIONAL WORK AND MARRIAGE
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Amnon Sella and Yael Yishai ISRAEL THE PEACEFUL BELLIGERENT, 1967-79
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Lewis H. Siegelbaum THE POLITICS OF INDUSTRIAL MOBILIZATION IN
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DISRAELI AND GLADSTONE
Rosemary Thorp (editor) LATIN AMERICA IN THE 1930s
Rosemary Thorp and Laurence Whitehead (editors) INFLATION AND STABIL
ISATION IN LA TIN AMERICA
Rosemary Thorp and Laurence Whitehead (editors) LA TIN AMERICAN DEBT AND
THE ADJUSTMENT CRISIS
Rudolf L. Tokes (editor) OPPOSITION IN EASTERN EUROPE
Toshio Yokoyama JAPAN IN THE VICTORIAN MIND
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Latin American Debt
and the Adjustment
Crisis
Edited by
Rosemary Thorp
Fellow of St Antony's College, Oxford,
Lecturer in Latin American Economics,
University of Oxford
and
Laurence Whitehead
Fellow of Nuffield College, Oxford
M
in association with
MACMILLAN PALGRAVE
PRESS
MACMILLAN
©Rosemary Thorp and Laurence Whitehead 1987
All rights reserved. No reproduction, copy or transmission
of this publication may be made without written permission.
No paragraph of this publication may be reproduced, copied
or transmitted save with written permission or in accordance
with the provisions of the Copyright Act 1956 (as amended).
Any person who does any unauthorised act in relation to
this publication may be liable to criminal prosecution and
civil claims for damages.
First published 1987
Published by
THE MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 2XS
and London
Companies and representatives
throughout the world
Typeset by Mid-County Press, London SW15
British Library Cataloguing in Publication Data
Latin American debt and the adjustment
crisis.~(St Antony's/Macmillan series)
1. Latin America~Economic conditions
I. Thorp, Rosemary II. Whitehead,
Laurence III. Series
330.98 HC123
ISBN 978-0-333-42649-4 ISBN 978-1-349-18671-6 (eBook)
DOI 10.1007/978-1-349-18671-6
To Carlos
Contents
List of Tables ix
List of Figures
Xlll
Notes on the Contributors
xiv
Preface
XV
Introduction
Rosemary Thorp and Laurence Whitehead
2 Some Aspects of the Development Crisis in Latin America 9
Carlos Diaz Alejandro
3 Long-run Adjustment, the Debt Crisis and the Changing
Role of Stabilisation Policies in the Recent Brazilian
Experience 28
Dionisio Dias Carneiro
4 Mexico from the Oil Boom to the Debt Crisis: an Analysis
of Policy Responses to External Shocks, 1978-85 68
Jaime Ros
5 The Adjustment Process m Chile: a Comparative
Perspective 117
Laurence Whitehead
6 Argentina's Most Recent Inflationary Cycle, 1975-85 162
Guido di Tel/a
7 Peruvian Adjustment Policies, 1978-85: the Effects of
Prolonged Crisis 208
Rosemary Thorp
8 Crisis and Economic Policy in Colombia, 1980--5 239
Jose Antonio Ocampo
vii
V111 Contents
9 The Balance-of-Payments Crisis and Adjustment
Programmes in Central America 271
Victor Bulmer-Thomas
10 Review and Conclusions 318
Rosemary Thorp and Laurence Whitehead
Index 355
List of Tables
1.1 Indicators of the international economy, 1977-84 3
2.1 Foreign trade indicators: average annual growth rates
between 1971-3 and 1982-4 11
2.2 Average annual growth rates in per capita Gross
Domestic Product 13
2.3 Ratio of total debt, net of reserves, to exports of goods
and services 14
2.4 Accumulated current account deficits and debt 16-7
2.5 Composition of current account deficits, 1970--84 18
2.6 Changes in international investment position of the
United States vis-a-vis Latin American republics and
other western hemisphere (excluding Canada) 19
2.7 New loans from international banks, 1982-4 20
2.8 Foreign trade indicators: average annual percentage
change between 1979-81 and 1982-4 21
2.9 Interest payments as a percentage of exports of goods
and services 22
2.10 Performance indicators: total percentage changes
between 1979-91 and 1982-4 23
3.1 Brazil: growth of manufacturing industry and structure
of production (%) 31
3.2 Brazil: employment in manufacturing industry (%) and
structure of employment 32
3.3 Brazil: selected economic indicators, 1970--84 37
3.4 Brazilian imports 40
3.5 Current account deficit and its main components 41
3.6 Brazil: foreign trade indices 41
3. 7 Current account deficit and its main components as a
percentage of GOP 44
3.8 Brazil: GOP, selected financial assets and credit
aggregates, 1970--84 46
3.9 External sector: main indicators 47
3.10 Gross Domestic Product (GOP) 47
3.11 Brazilian foreign debt and international reserves 48
3.12 Brazilian exports 51
3.13 Brazil: price and industrial output indices, 1979-84 54
4.1 Performance of the Mexican economy, 1963-84 70
IX
List of Tables
X
4.2 Composition of total public and private investment in
1970--7 and during the oil boom, 1978~81 72
4.3 Use of foreign debt, 1972~84 74
4.4 Indicators of the international economy, 1977~84 76
4.5 The flow of funds identity, 1978~84 78
4.6 Public sector accounts (% of GOP), 1980--4 83
4.7 Main targets of the adjustment programme, 1983~5 84
4.8 Composition of the gross acquisition of domestic
financial assets by the (non-bank) private sector 88
4.9 Exchange rates, quarterly behaviour, 1982~5 90
4.10 Minimum wage settlements, inflation and the wage
policy stance, 1981~5 94
4.11 Industrial output, investment and employment, 1981 ~ 5 96
4.12 Trade and the balance of payments, 1981~5 97
4.13 The 1984 economic recovery, annual growth rates 101
4.14 Inflation and relative prices, 1981~5 104
4.15 Adjusted and non-adjusted figures for the current
account, capital flight and the stock of foreign assets
held by Mexican residents, 1973~84 108
5.1 Disinflation, fiscal control, but no sustained growth 119
5.2 Real interest rates (ex post) for Chilean debtors 120
5.3 Some conventional Latin American debt-service ratios,
1975~82 121
5.4 The structure of public enterprise 123
5.5 Sluggish exports, soaring foreign debt 131
5.6 Sources of capital inflow 131
5. 7 External debt servicing and the net resource transfer
from abroad 132
5.8 The CIEPLAN perspective 133
5.9 Urban unemployment trends 144
5.10 A traditional explanation: the copper market 155
6.1 Chronology of presidencies and the economic cycle,
1975~85 164
6.2 The balance of payments and external capital
movements, 1976-8 170
6.3 The balance of payments and external capital
movements, 1979~80 174
6.4 The balance of payments and external capital
movements, 1981~2 175
6.5 The balance of payments and external capital
movements, 1983~4 180