Debt Cycles in the World-Economy: Foreign Loans, Financial Crises, and Debt Settlements, 1820–1990

247 Pages·1992·25.56 MB·English

by  Christian Suter

Debt Cycles
in··the World-Economy

Debt Cycles
in the World-Economy
Foreign Loans, Financial Crises,
and Debt Settlements, 1820-1990
Christian Suter
I
LONDON AND NEW YORK
First published 1992 by Westview Press, Inc.
Published 2018 by Routledge
52 Vanderbilt Avenue, New York, NY 10017
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Routledge is an imprint of the Taylor & Francis Group, an informa business
Copyright © 1992 Taylor & Francis
All rights reserved. No part of this book may be reprinted or reproduced or utilised in any
form or by any electronic, mechanical, or other means, now known or hereafter invented,
including photocopying and recording, or in any information storage or retrieval system,
without permission in writing from the publishers.
Notice:
Product or corporate names may be trademarks or registered trademarks, and are used
only for identification and explanation without intent to infringe.
Library of Congress Cataloging-in-Publication Data
Suter, Christian, 1956-
Debt cycles in the world-economy : foreign loans, financial
crises, and debt settlements, 1820-1990 / Christian Suter.
p. em.
Includes bibliographical references and index.
ISBN 0-8133-8351-X
1. Loans, Foreign-History. 2. Debts, External-History.
3. Business cycles-History. 4. Debts, External-Case studies.
5. Business cycles--Case studies. I. Title.
HG3891.5.587 1992
336.3' 435-dc20 91-16214
CIP
ISBN 13: 978-0-367-01659-3 (hbk)
Contents
List of Tables and Figures vii
Preface xi
Introduction 1
PART ONE
Periphery Indebtedness in the World-Economy 9
1 External Debt of Sovereign Borrowers: Seven Approaches 11
2 Structural Features and Long-Term Processes of the
World-System 17
3 Dynamics of Global Debt Cycles: A Theoretical Model 33
PART TWO
Empirical Evidence of Global Debt Cycles 43
4 Capital Exports from the Core and Foreign Loans
Raised by the Periphery 45
5 Global Debt Crises 61
6 The Pattern of Debt Settlements 85
PART THREE
Case Studies: The Debt Histories of Peru, Liberia and Turkey 111
7 Selection of the Country Case Studies:
Methodological Considerations 113
8 Peru: The Classical Case 121
v
vi Contents
9 Liberia: An Enclave Economy at the Extreme Periphery 145
10 Ottoman Empireffurkey: From World-Empire to Periphery 161
Conclusion 179
Appendix: Time Series of Data on Global Debt Crises, 1823-1989 195
Bibliography 201
mkx ~
Tables and Figures
Tllbles
2.1 Periodization of Kondratieff Growth Cycles 20
2.2 Periodization of U.S. and British Kuznets Cycles 24
4.1 Boom Periods of External Borrowings of Peripheral and
Semi-Peripheral Countries, 1822-1981 53
5.1 Outbreak and Duration of Global Debt Cycles and
Kondratieff Growth Cycles 66
5.2 Debt Crises and Major Countries in Default or Involved
in Reschedulings 69
5.3 Default on Foreign Government Bonds, 1820-1985, by
Country 70
5.4 Official and Private Multilateral Reschedulings, 1956-
1989, by Country 71
5.5 Duration of Debt-Service Incapacity of Debtor
Countries, 1820-1985 73
5.6 Determinants of Default Incidence, 1931-1933 78
5.7 Determinants of Rescheduling Incidence, 1978-1985 79
6.1 Average Yearly Duration of Defaults on Foreign
Bonds 91
6.2 Average Degree of Debt Release Granted by Creditors:
Capitalization Rate of Arrears, Percentage Reduction of
Interest Rates and of Outstanding Debts 94
6.3 Average Terms of Reschedulings with the Paris Oub
and Commercial Banks, 1956-1986 103
8.1 Debt-Servicing Difficulties and Debt Settlements of
Peru, 1826-1953 125
8.2 Debt-Servicing Difficulties and Multilateral Resched-
uling Agreements of Peru, 1968-1985 135
vii
viii Tables and Figures
9.1 Phases of Debt-Servicing Difficulties and Terms of
Subsequent Debt Settlements of Liberia, 1874-1935 150
9.2 External Public Debt of Liberia, 1904-1989 153
9.3 Debt-Servicing Difficulties and Multilateral Resched-
uling Agreements of Liberia, 1963-1985 154
10.1 Foreign Governmental Bonds of the Ottoman Empire,
1850-1914 165
10.2 Phases of Debt-Servicing Difficulties and Terms of
Subsequent Debt Settlements of the Ottoman Empire,
1876-1940 167
10.3 External Public Debt of Turkey, 1924-1989 173
10.4 Debt-Servicing Difficulties and Multilateral Resched-
uling Agreements of Turkey, 1958-1983 174
Figures
1.1 Global Debt Crises: Share of Countries in Default (1820-
1985) or Subject to Reschedulings (1956-1989) Relative to
All Nation-States and Share of Blocked Credits (1823-
1939) 3
3.1 Hypothetical Relationship Between Kondratieff Cycle
and Global Debt Cycle 37
4.1 Net Capital Exports of Great Britain and France, 1816-
1913, in Millions of U.S. Dollars 49
4.2 International Capital Movements of Six Major Core
Countries During the Interwar Period, in Billions of U.S.
Dollars 51
4.3 Total and Private Net Capital Flows from DAC Coun-
tries to Developing Countries, 1956-1985, in Billions of
U.S. Dollars 52
5.1 Number of Countries in Default or Involved in Resched-
ulings 63
5.2 Number of Countries in Default or Involved in Resched-
ulings as a Percentage of All Nation-States 64
5.3 Number of Countries Declaring Default on Foreign
Bonds 65
5.4 Share of Foreign Bonds in Default Relative to
Total Foreign Investment of Major Core Countries,
1823-1939 67
Tables and Figures ix
6.1 Number of Debt Settlements Concerning Defaulted
Foreign Bonds per Five-Year Periods, 1821-1825 to
1981-1985 89
6.2 Number of Multilateral Debt-Rescheduling Agreements
by Type of Creditor, 1956-1986 100
8.1 Peruvian External Public Debt and Debt-Service Ratio,
1955-1989 134
8.2 External Public Debt of Peru and Suspension Periods 140
9.1 External Public Debt of liberia and Suspension
Periods 157
10.1 External Public Debt of the Ottoman Empire (1850-1913)
and Turkey (1958-1984) and Suspension Periods 176