Table Of ContentTHE 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
