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The Latin American Debt PDF

220 Pages·1992·18.198 MB·English
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THE LATIN AMERICAN DEBT Also by Antonio Jorge and Jorge Salazar-Carrillo EXTERNAL DEBT AND DEVELOPMENT STRATEGY IN LATIN AMERICA FOREIGN DEBT AND LA TIN AMERICAN ECONOMIC DEVELOPMENT TRADE, DEBT AND GROWTH IN LATIN AMERICA FOREIGN INVESTMENT, DEBT AND ECONOMIC GROWTH IN LA TIN AMERICA The Latin American Debt Edited by Antonio Jorge Professor of Economics Florida International University and Jorge Salazar-Carrillo Professor of Economics Florida International University Palgrave Macmillan ISBN 978-1-349-12053-6 ISBN 978-1-349-12051-2 (eBook) DOI 10.1007/978-1-349-12051-2 © Antonio Jorge and Jorge Sa1azar-Carrillo, 1992 Softcover reprint of the hardcover 1s t edition 1992 All rights reserved. For information, write: Seho1arly and Referenee Division, St. Martin's Press, Ine., 175 Fifth Avenue, New York, N.Y. 10010 First published in the United States of Ameriea in 1992 ISBN 978-0-312-06797-7 Library of Congress Cata1oging-in-Pub1ieation Data The Latin Ameriean debtjedited by Antonio Jorge and Jorge Sa1azar-Carrillo p. em. Includes index. ISBN 978-0-312-06797-7 I. Debts, Externa1-Latin Ameriea. 2. Debt re1ief-Latin Ameriea. I. Jorge, Antonio, 1931- 11. Sa1azar-Carrillo, Jorge. HJ8514.5.L388 1992 336.3'435'098-de20 91-22391 CIP To our children Contents Preface ix Acknowledgements xi Notes on the Contributors xii List of Abbreviations XIV Introductory Overview Antonio Jorge, Jorge Salazar-Carrillo and Bernadette West PART I GENERAL ISSUES OF LATIN AMERICA: DEBT, FOREIGN INVESTMENT AND ECONOMIC DEVELOPMENT The External Debt and the Economic Development of Latin America 15 Antonio Jorge and Jorge Salazar-Carrillo 2 New Direction of Foreign Investment in Developing Countries 25 Felipe Pazos 3 Reflections on the Macro-Economy of Latin American Development 40 Gustav Ranis 4 Latin America: The Revival of Growth and the W orld Bank 57 Carlos Quijano PART 11 ISSUES OF LATIN AMERICAN DEBT RELIEF: PROPOSALS AND CONTROVERSIES 5 Real Alternatives for Handling the Latin American Debt Problem 67 Pedro Palma 6 Latin American Debt-Equity Swaps 84 AU Parhizgari vii Vlll Contents 7 Credit Securitization and Developing Countries' Debt 100 Wilbert Bascom 8 How to Assess the Market Value of Developing Country Loans: The Case of Latin America 115 M anuel Lasaga 9 External Debt, Unilateral Transfers and Kleptocracy in Latin America 146 Markos Mamalakis PART 111 ISSUES OF CENTRAL AMERICA AND TUE DOMINICAN REPUBLIC: DEBT, ECONOMIC POLICY AND TUE NEW POLITICAL ORDER 10 Recent Developments in the Central American Debt Crisis 155 Raul Moncarz II Economic Poliey in the Dominican Republic sinee 1966 170 DeLisie Worrell 12 New Perspectives for Modernization in Central America 179 George Im'in Index 201 Preface The vicissitudes of the Latin American external debt seem endless. Despite the various policy approaches tried over the years, the essential problem remains unabated: namely, the burden of financing the debts effectively impairs the developmental efforts of the region. Numerous plans have succeeded one another, underlining this or that trait: debt for-equity swaps (DESs); stable and/or fixed interest rates; repurchas ing the debt at secondary markets' prevailing prices; partial remission of capital obligations; conversion of principal into different kinds of variously secured long-term loans; putting a ceiling on interest payments as a percentage of export proceeds; not to speak of the many ad hoc negotiations on rescheduling and new bridge loans, and so on. The point to be noted is the gradual change in emphasis in all of these schemes, from a piecemeal analysis of the problem and a narrow focus on honouring payments, to an open recognition of the tremen dous impact of the debt on the economic development and well-being of the area. The concern is not now exclusively centred on maintaining the integrity of the international financial system and restoring the soundness of worried banking institutions. Counter-balancing forces have come into play, readjusting our perception and modifying the participants' perspective of that many-sided phenomenon which is the regional debt of Latin America. The Brady plan has been partIy instrumental in helping to bring about a fresh view of the issue. At long last, it seems that a growing realization ofthe rock-bottom truth that without sustained economic development there cannot be any real, long-term solution to the thorny problem of debt repayment - is slowly emerging. The editors would like to point out, obiter dictum, that they took a lonely stance in favour of this position as far back as February 1982, at an international conference on the subject which took place at Florida International University. Finally, it is worthwhile to remark that the global macro-social weltanschauung (world view) on the debt now in vogue is not wertlos (without value). Neo-classicism, as economic philosophy, now defini tely enjoys the upper-hand in the policy schemes elaborated by technicians in international institutions in collaboration with debtor and creditor nations. Perhaps Latin America was in need of adjusting ix x Preface its position on the economic ideology spectrum, shifting somewhat towards the pole of market-driven mechanisms and behaviour. However, it would be a cosdy mi stake to ignore the weighty influence of culture, values and established institutions. The corporatist tradi tions of the Southern Hemisphere are very much alive in the ethos of Latin nations and definitely operative in their political realm. The public sentiment cannot be simply ignored in matters such as these in societies which are struggling for stability and sustained progress. The wide consensus among top-ranking Latin economic functionar ies in the recent meeting of SELA (Sistemas Economicos Latino Americanos: Latin American Economic Systems) regarding the social and developmental priorities of their countries, as they relate to the handling of the debt problem, reveals their abiding concern with the fundamental question of the proper strategy for the socio-economic development of Latin America. In this context, it would be weIl to remind ourselves that the treatment of the extern al debt of the area is definitely not reducible to a mere matter of financial technique. The debt is a symptom and a symbol of the whole Latin American problem. Any attempt at visualizing it otherwise is ultimately doomed to fai!. Superficial treatments will only buy us the illusion of a eure. At best, a little time will be bought while the wound festers. There is no substitute for a truly autochthonous and comprehensive solution to the area's problems. In order for such a solution to be feasible, Latin societies must count on the active help of the international economic community. Only with the vigorous support of world trade, finance and investment can local programmes succeed. Let us hope that such an outcome will come to pass. ANTONIO JORGE JORGE SALAZAR-CARRILLO

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