Developing Country Debt and Economic Performance

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).

Preface Debt, Policy, and Performance: An Introduction Susam M. Collins Book I - Indonesian Economic Policies and Their Relation to External Debt Management Wing Thye Woo and Anwar Nasution 1. Introduction and Summary 2. Political and Economic Instability, 1950-65 3. The Political Economy Factors in Policymaking 4. The Fiscal System 5. Monetary Policy and Financial Structure 6. Exchange Rate Policy 7. External Debt Management 8. Conclusions and Prospects Notes References Book II - External Debt and Macroeconomic Performance in South Korea Susam M. Collins and Won-Am Park 1. Introduction 2. Historical Background: Economic Development Prior to 1962 3. An Overview of Korea's External Debt 4. Three Cycles of Debt Accumulation, 1960-86 5. Internal versus External Shocks 6. Introduction to Part Two 7. Korea's Rapid Growth 8. Savings and Investment 9. Exchange Rate, Trade, and Industrial Policy 10. Exchange Rates, Wages, and Productivity 11. Fiscal and Monetary Policy 12. Income Distribution 13. Lessons from Korea's Experience: A Synthesis Data Appendix Notes References Book III - The Marcos Legacy: Economic Policy and Foreign Debt in the Philippines Robert S. Dohner and Ponciano Intal, Jr. 1. Introduction 2. Government Expenditure and Revenues 3. Trade Policy, Industrial Policy, and the Exchange Rate 4. Government Interventions and Rent Seeking 5. The Philippine Financial System and the Debt Crisis 6. External Debt and Debt Management 7. Debt Crisis and Adjustment 8. The Aquino Government and Prospects for the Economy Notes References Book IV - Debt, Adjustment, and Growth: Turkey Merih Celasun and Dani Rodrik Part I - Policy Phases and Adjustment Patterns 1. Turkish Economic Development: An Overview 2. Economic Boom and Debt Crisis, 1973-77 3. Crisis Without Adjustment, 1978-79 4. Stabilization and Adjustment Policies, 1980-85 5. Performance and Adjustment Patterns in the 1980s Part II - Selected Aspects of Debt and Adjustment 6. External Borrowing, Real Wage Flexibility, and Equilibrium Exchange Rates: A General Equilibrium Analysis 7. Trade Regime and an Anatomy of Export Performance 8. The Public Sector: Fiscal Adjustment and Resource Mobilization 9. External Financial Relations and Debt Management 10. Conclusions and Prospects Appendix A. Political Chronology Appendix B. Statistical Appendix Notes References Biographies List of Contributors Name Index Subject Index