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Financing Problems of Developing Countries: Proceedings of a Conference held by the International Economic Association in Buenos Aires, Argentina PDF

365 Pages·1985·31.37 MB·English
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Financing Problems of Developing Countries The two dramatic increases in the world price of oil during the 1970s have seriously worsened the economic prospects of many developing countries. They have done so both directly - by increasing import bills for oil - and indirectly - by slowing economic growth in the developed countries, and so reducing their imports from develop- ing countries. The newly industrialising countries did not find it too difficult to continue quite rapid development during the 1970s, not least because they were able to borrow oil money recycled by the big international banks. In the 1980s, the newly industrialising countries have found it more difficult to borrow, not least because many of them are now heavily in debt and some - like Mexico - have been in serious financial difficulty. Against this background, the International Economic Association decided to organise a conference in Buenos Aires at which these issues could be considered. It was attended by leading authorities on the financing problems of developing countries, drawn from both the developing and the developed world. A distinguished programme committee organised the conference under the chairmanship of Armin Gutowski, who provides a valu- able introduction to the volume, summarising the conclusions of the conference. Together with a summary record of the discussion of the confer- ence, the fifteen papers provide a valuable background for all who wish to understand the difficulties being met at present in financing economic development in the Third World. It does so by summar- ising and interpreting the empirical evidence; by providing analyses and models which throw new light on underlying structures, insti- tutions and behaviour; and by challenging the conventional wisdom. Hence, this volume identifies new policy options which can ease, if not remove, the current constraints on economic development in the Third World. Armin Gutowski is Professor of Economics of the University of Hamburg and President of the Hamburg Institute for International Economics. A.A. Arnaudo is Professor of Economics at the Universidad Nacional de Cordoba, Argentina. Hans-Eckart Scharrer is Director of International Finance at the Hamburg Institute for International Economics. Series Standing Order If you would like to receive future titles in this series as they are published, you can make use of our standing order facility. To place a standing order please contact your bookseller or, in case of difficulty, write to us at the address below with your name and address and the name of the series. Please state with which title you wish to begin your standing order. (If you live outside the United Kingdom we may not have the rights for your area, in which case we will forward your order to the publisher concerned.) Standing Order Service, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hants, RG21 2XS, England. Financing Problems of Developing Countries Proceedings of a Conference held by the International Economic Association in Buenos Aires, Argentina Edited by Armin Gutowski A.A. Arnaudo and Hans-Eckart Scharrer M MACMILLAN © International Economic Association 1985 Softcover reprint ofthe hardcover lst edition 1985 978-0-333-34990-8 Ali rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be rcproduced, 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 1985 Published by THE MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world British Library Cataloguing in Publication Data Financing problems of developing countries. 1. Developing countries-Economic conditions I. Gutowski, Armin II. Arnaudo, A.A. III. Scharrer, Hans-Eckart IV. International Economic Association 330.9172'4 HC59.7 ISBN 978-1-349-06751-0 ISBN 978-1-349-06749-7 (eBook) DOI 10.1007/978-1-349-06749-7 Contents Acknowledgements Vll List of Participants ix Introduction Armin Gutowski, A.A. Arnaudo and Hans-Eckart Scharrer xi PART ONE: THE 1980s 1 Capital Requirements in Economic Development: The Decade Ahead Francis X. Colaco 3 PART TWO: DOMESTIC FINANCING 2 The Role of Domestic Financing in the Process of Economic Development: Empirical Evidence Egon Kemenes 29 3 The Financial Sector in the Planning of Economic Development David Backus, Herminia Blanco, David Levine 42 4 Savings Generation and Financial Programming in a Basic Need Constrained Developing Economy Jitendra G. Borpujari 59 5 The Role of Financial Institutions in Economic Development: A Theoretical Analysis Basant K. Kapur 83 6 The Role of the Public Sector in Mobilisation and Allocation of Financial Resources W.T. Newlyn 98 7 Inflation and the Financing of Alternative Development Strategies Alfredo J. Canavese and Luisa Montuschi 115 Vl Contents PART THREE: FOREIGN AND INTERNATIONAL FINANCING 8 The Flow of Public and Private Financial Resources to Developing Countries: Recent Trends Helmut Fuhrer 139 9 The Role of International Financial Markets in the Financing of Development T.M. Rybczynski 162 10 How to Manage a Repressed Economy Ronald I. McKinnon 182 11 Oil Surplus Funds: The Impact of the Mode of Placement Hazem El-Beblawi 210 12 External Financing and the Level of Development: A Conceptual Approach Robert Z. Aliber 234 13 Foreign Indebtedness and Economic Growth: Is there a Limit to Foreign Financing Armin Gutowski 249 14 Exchange-Rate Policy, International Capital Movements and the Financing of Development Alexandre Kafka 268 PART FOUR: NORTH AND SOUTH 15 New Approaches to Development Finance: A Critical Look at the Brandt Report Proposals Niels Thygesen 297 PART FIVE: THE DISCUSSIONS 16 Points from the Discussions A.A. Arnaudo 319 Index 349 Acknowledgements In formulating the programme of the conference and in selecting potential authors and discussants, the authors benefited greatly from the advice of the members of the Programme Committee: Mahbub ul Haq of the World Bank; Ivan Ivanov of the Institute for World Economics in Moscow; Alexandre Lamfalussy of the Bank for Inter- national Settlements; Ronald I. McKinnon of Stanford University; Justinian F. Rweyemamu of the United Nations and Leopoldo Solis of the Banco de Mexico. It is only fair to say that without the invitation and the strong support of the Asociaci6n Argentina de Economia Politica and its president, Rolf R. Mantel, the conference would not have taken place at all. Luisa Montuschi not only drafted a first outline of the conference upon which the Programme Committee could draw, but she and Alfredo J. Canavese were also responsible for all the local arrangements. These ranged from fund-raising to making partici- pants feel at home in Buenos Aires, duties which they fulfilled to the admiration of their collaborators abroad as well as of their guests. They had the generous logistic and financial support of the Central Bank of Argentina - in whose premises the conference was held - and of its staff. Financial assistance was also provided by the World Bank, UNESCO, the OPEC Fund and various national institutions. Our thanks, and the thanks of the International Economic Associ- ation go to them all. The list of supporters deserving special gratitude would be incom- plete without mentioning the lEA officers and staff. Victor L. Urquidi, the President of the lEA, was heavily involved in the preparation of the conference, suggesting potential authors and participants and raising international financial assistance. We owe much to his endeavours and advice. Luc Fauvel, the Secretary- General of the lEA and his experienced and diligent staff, especially Elisabeth Boucherant, handled complex organisational matters smoothly and efficiently. At the conference secretariat in Hamburg, Rosemari Hafkesbring and Margot Hansen had to carry out extra Vll viii Acknowledgements work besides their normal duties, and did so with skill and good humour. Finally, we are greatly indebted to Sir Douglas Hague, the General Editor of the lEA, for his professional handling of the preparation of this volume. If, despite many difficulties and obstacles, it has finally been completed, this is mainly due to his insistence and involvement. A.G. A.A. H.-E.S. List of Participants Professor Robert Z. Aliber, Graduate School of Business, University of Chicago, USA Professor Aldo Arnaudo, Faculty of Economic Science, National University of Cordoba, Argentina Professor David Backus, Department of Economics, Queen's Uni- versity, Canada Professor Silvio Borner, Institute for Current Economic Develop- ment, University of Basle, Switzerland Dr Jitendra G. Borpujari, International Monetary Fund, Washington DC, USA Professor Alfredo J. Canavese, Faculty of Economic Science, Uni- versity of Buenos Aires, Argentina Dr Francis X. Cola~o, World Bank, Washington DC, USA Dr Guillermo de Ia Dehesa, Bank of Spain, Madrid, Spain Professor Victor Jorge Elias, Tucuman, Argentina Dr Raid Fahmi, Industrial Bank of Kuwait, Kuwait Dr Helmut Fuhrer, OECD, Paris, France Professor Ernesto Gaba, Buenos Aires, Argentina Professor Armin Gutowski, HWWA -Institute for Economic Dev- elopment, Hamburg, Germany Mrs Chandra Hardy, Overseas Development Council, Washington DC, USA Professor Alexandre Kafka, International Monetary Fund, Washing- ton DC, USA Dr Basant K. Kapur, Department of Economics and Statistics, National University of Singapore, Singapore ix

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