Issues of International Finance in Developing Countries The financial Crises of this and last Decades: Anticipation, Action and Reaction - Part 1
Inflation and financial instability has been a way of life in many Latin American countries for over four decades. However, none were as severe and unexpected as the ones which befell Argentina, Brazil and Mexico in the 1990s. Excess development financing through external indebtedness is found to be the major culprit. Fixed exchange rate systems did not help either. Fixed exchange rate systems and overgenerous (pushy) creditors contributed to financial distress.
HINWEIS: Der Vortrag ist in englischer Sprache. Das Skript zum Vortrag umfasst 7 Seiten Text.
Most of the Latin American countries have experienced serious problems with financial stability and economic growth in the last 50 years. In order to escape the dependence on exports of raw materials and food, import substitution industrialization in the 1950s and 60s provided a new impetus not only to economic development but also to inflation, as a narrow tax base could not sustain increased public sector expenditures for needed economic and social infrastructure and subsidies to the new industries. While the monetarist economists of the “North” held lose fiscal and monetary policies responsible for the inflationary problems, their counterparts from the “South” argued that structural shortcomings of their economies were at the root of the persisting inflation. Through many years policy makers went back and forth from periods of fiscal and monetary expansion, increasing external and internal debt, and with it inflation and balance-of-payments deficits, to stabilization attempts, which...
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