External debt and development alternatives in Latin America

Abstract

The document proposes that the origin of the foreign debt problem faced by developing
countries is found in the way international capital markets work. A mistaken optimistic
view concerning financial market’s behaviour in the 70’s might extend for many years
since debtor nations have adapted their economic structures to a great amount of external
funds; on the contrary, a shortage of funds is expected in this decade’s last years. These tendencies
will deeply mark the social and economic performances of most countries in this region.
Some of the main options that these nations will be forced to face are analysed in this
text. Apart from the imperative need to fight for a change in the way foreign debt has been
renegotiated, it is also necessary to reorganize their external economic policies. This occurs through the intensification of economic cooperation among debtor nations and through initiating
a new phase of import’s substitution now being coordinated by means of import’s
expansion. Some facts responsible for a better capacity of handling and adjusting different
countries according to the economic strategies they have adopted in the past and to the political
situation each country has to face are also demonstrated here.

JEL Classification: F32; F34; H63.