Growth and External Debt Management

291 Pages·1989·27.653 MB·English

by  H. W. Singer, Soumitra Sharma (eds.)

GROWTH AND EXTERNAL DEBT MANAGEMENT
Also by H. W. Singer
ECONOMIC DEVELOPMENT AND WORLD DEBT (editor with Soumitra Sharma)
ECONOMIC DEVELOPMENT OF THE BRAZILIAN NORTH-EAST
ECONOMIC DEVELOPMENT OF UNDER-DEVELOPED COUNTRIES
FOOD AID: The Challenge and the Opportunity (with John Wood and Tony Jennings)
INTERNATIONAL DEVELOPMENT, GROWTH AND CHANGE (co-author)
RICH AND POOR COUNTRIES
THE INTERNATIONAL ECONOMY AND INDUSTRIAL DEVELOPMENT
(co-author)
THE ROLE OF THE ECONOMIST AS OFFICIAL ADVISOR
THE STRATEGY OF INTERNATIONAL DEVELOPMENT
UNEMPLOYMENT AND THE UNEMPLOYED
Also by Soumitra Sharma
AN ESSAY ON ECONOMIC GROWTH
ECONOMIC DEVELOPMENT AND WORLD DEBT (editor with H. W. Singer)
PRIVREDNI RAZVOJ I DUGOVI
STRATEGIJA EKONOMSKOG RAZVOJA ZA ZEMUE U RAZVOJU
TEORIJA I POLITIKA PRIVREDNOG RAZVOJA U ZEMUAMA U RAZVOJU
Growth and External
Debt Management
Edited by
H. W. Singer
Fellow of the Institute of Development Studies, University of Sussex
and
Soumitra Sharma
Pro-Dean and Professor of Development Economics, University of
Zagreb
Palgrave Macmillan
ISBN 978-1-349-10946-3 ISBN 978-1-349-10944-9 (eBook)
DOI 10.1007/978-1-349-10944-9
©H. W. Singer and Soumitra Sharma, 1989
Chapter 18 ©Edward J. Kane, 1989
Softcover reprint of the hardcover 1st edition 1989 978-0-333-49472-1
All rights reserved. For information, write:
Scholarly and Reference Division,
St. Martin's Press, Inc., 175 Fifth Avenue, New York, N.Y. 10010
First published in the United States of America in 1989
ISBN 978-0-312-02812-1
Library of Congress Cataloging-in-Publication Data
Growth and external debt management I edited by H.W. Singer and
Soumitra Sharma.
p. em.
Includes index.
ISBN 978-0-312-02812-1 $45.00 (est.)
1. Debts, External-Developing countries--Management.
2. Developing countries--Economic policy. I. Singer, Hans
Wolfgang, 1910- . II. Sharma, Soumitra.
HJ8899.G76 1989
336.3' 435'091724--dc19 88-36658
CIP
Contents
List of Tables xviii
List of Figures ix
Preface X
Notes on Contributors xiv
PART I GROWTH AND DEBT MANAGEMENT
1 External Debt Management and Economic Growth:
An Introduction 3
Soumitra Sharma
2 External Debt Management 12
Mia Mikic
3 Debt Globalisation for its Management 22
Boguslav Jasinski
4 Management of the Third World Debt 30
Zoran Jasic
5 The 1980s: A Lost Decade- Development in Reverse? 46
H. W. Singer
PART II SOME POLICY ISSUES AND MODELS
CONSIDERED
6 Cross-conditionality or the Spread of Obligatory
Adjustment 59
Stephany Griffith-Jones
7 Growth with External Debt and Inflation 80
Yasuoki Takagi
8 Fiscal Policy, Deficits and Crowding-out 97
George Macesich
9 Conditionality and Adjustment 115
Hajna lstvanffy Larine
v
vi Contents
10 Agriculture and Managing the Debt Crisis 127
Vladimir Stipetic
11 Failures of Renegotiation Process 134
Carlos A. Rozo
12 An Analysis of Structural Changes in the Seven Major
Exchange Rates 146
Hiroya Akiba and Tomoki Waragai
13 International Default and Rescheduling under Interest Rate
Uncertainty 160
Ronald Schramm
14 Lender Paradoxes and the Recent Turnarounds in
International Capital Markets 172
Sunanda Sen
15 Sovereign-Risk Quantification Methodologies: A Critique 192
R. F. K. Wynn
16 Effects of Macroeconomic Transmission of Tariffs 211
SdJren Bo Nielsen
17 Private Foreign Investment and Welfare in LDCs 220
Monojit Chatterji and Sajal Lahiri
18 International Competition in the Market for Financial
Regulatory Services 230
Edward J. Kane
PART III POLICY EFFECTS: CASE STUDIES 235
19 East Europe's Debt Situation in Global Perspective:
Utopian versus Realistic Solutions 237
Paul Marer
20 Trade Policy Reforms in Sub-Saharan Africa 246
Ravi Gulhati
21 Liberal Economic Strategy for Debt Crisis Management:
The Case of Turkey 256
Arif Ersoy
Contents vii
22 Yugoslav Debt Crises Management 272
Aleksandar Bogunovic
Index 277
List of Tables
4.1 External debt of the developing countries: major
dimensions (1982-7) 31
4.2 Key debt ratios of developing countries 32
4.3 Medium- and long-term projections of debt indicators and
GDP growth rate of developing countries 34
4.4 Bid-offer market prices of debtor-country loans 37
4.5 Amount of debt relief 1983-6 42
6.1 Stand-by, extended and structural adjustment facility
(SAF) arrangements as of 31 October 1987 64
6.2 Policy components in SALs and in concurrent IMF
arrangements 72
6.3 Types of policy measures requested in return for SAL
finance, 1980-1986 75
7.1 Several indices in countries with and without recent
debt-servicing problems 83
7.2 Some data on trade and external debt in LDCs 90
7.3 Relative weight of imported investment goods in Malaysia 91
7.4 Relative weight of import of machinery and transport
equipment in several selected countries 92
9.1 Applied instruments and their time requirement 116
9.2 Main methods for easing the debt situation 119
10.1 Agricultural and food products in world trade 131
10.2 Agricultural productivity 1969-71 and 1979-81 132
11.1 Mexico's external accounts: exports 136
11.2 Mexico's external accounts: imports 137
11.3 Debt-income ratios of the industrial countries 141
12.1 Significant structural changes 149
12.2 Computation results of structural changes in seven currencies 151
12.3 AR; selected by MAIC 153
16.1 The four international money regimes 215
16.2 Domestic and transmission effects of a home-country tariff
in different international money regimes 218
17.1 Critical level of foreign capital 227
17.2 Values for individual cases 227
19.1 Market-prices for sovereign debts in mid-1986 242
21.1 External debt burden of LDCs 1980-6 258
21.2 Basic indicators 1962-83 263
21.3 Basic indicators 266
21.4 Turkey's external debts 268
viii
List of Figures
2.1 The borrowing capacity 19
6.1 Options for countries starting from a position of large
negative resource transfers 62
7.1 Equilibrium of trade balance and capital accumulation 81
7.2 Decrease in external funds and acceleration of inflation 87
8.1 Definitions of crowding-out 104
8.2 Crowding-out: four examples 106
12.1 Significant structural changes 148
13.1 Sequence of events in lending operation 161
13.2 Lender-borrower equilibrium 165
17.1 Increase in Z with upward-sloping demand 225
IX