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Developing Country Debt and Economic Performance, Volume 2

Country Studies--Argentina, Bolivia, Brazil, Mexico

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 has 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.

This project on developing country debt, undertaken by the National Bureau of Economic Research, provides a detailed analysis of the ongoing developing country debt crisis. 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 project analyzes the crisis from two perspectives, that of the international financial system as a whole (volume 1) and that of individual debtor countries (volumes 2 and 3).

This second volume contains lengthy and detailed case studies of four Latin American nations—Argentina, Bolivia, Brazil, and Mexico—providing a wealth of comparative data and new statistics on the general economic development of each nation. The authors explore the various factors that contributed to the debt crisis in each country and analyze how the crisis was managed once it had taken hold. Trenchant economic analyses are enchanced by assessments of the stark political realities behind the policy choices facing each nation.

Table of Contents

Introduction by Jeffrey D. Sachs
Book I - Debt and Macroeconomic Instability in Argentina
Rudiger Dornbusch and Juan Carlos de Pablo
1. An Overview of Debt and Macroeconomic Problems
2. Some Debt History
3. From Martinez de Hoz to Alfonsín
4. The Process of High Inflation
5. The Austral Plan
6. Avenues and Obstacles to Growth
Appendix A. Price Dynamics Under a Tablita Regime
Appendix B. The Budget and Inflation
Appendix C. Statistical Data
Book II - Bolivia’s Economic Crisis
Juan Antonio Morales and Jeffrey D. Sachs
1. An Overview of Macroeconomics Performance
2. Political Economy and Macroeconomics Policymaking, 1952-87
3. State Capitalism and the Operation of the Public Sector
4. Trade Policies, 1970-85
5. Aspects of Foreign Debt Accumulation, 1952-85
6. The Emergence of Hyperinflation, 1982-85
7. Ending the Hyperinflation, 1985-88
8. Bolivian Debt Management, 1985-88
9. Beyond Stabilization to Economic Growth and Development
Book III - The Macroeconomics of the Brazilian External Debt
Eliana A. Cardoso and Albert Fishlow
1. Introduction
2. Adjustment to the First Oil Shock: From Import Substitution to Macroeconomic Restraint
3. Adjustment in the 1980s: From International Monetarism to the Plano Cruzado
4. Stopping Inflation
5. External Debt, Budget Deficits, and Inflation
6. Trade Policies and Consequences
7. Epilogue: Debt and Development
Appendix: Brazilian Statistics
Book IV - Economic Policy and Foreign Debt in Mexico
Edward F. Buffie
1. Introduction
2. The Record of Stabilizing Development
3. Shared Development and the Echeverría Administration
4. The Lopez Portillo Administration
5. The De La Madrid Administration and the Present Crisis
6. Import Compression, Real Wages, and Underemployment
7. Fiscal and Monetary Policy, Financial Intermediation, Inflation, and Growth
8. Debt Management and Negotiations
with Allen Sangines
9. Future Prospects: Is There A Way Out?
List of Contributors
Name Index
Subject Index

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