The Foreign Debt national Development Conflict

Carvounis reviews the debt-servicing problems of developing countries, focusing on the experience of nine cases, mostly in Latin America. He stresses the adverse impact on the development prospects of these countries resulting from the adjustment policies that they have been required to pursue. Carvounis criticizes the current austerity-oriented approach to restoring orderly debt-servicing, maintaining that his emphasis is leading to severe economic, political, and social problems within these countries.

He argues that the economic capacity and political will of borrowing countries to continue this route is dissipating. Choice Review: ?Carvounis reviews the debt-servicing problems of developing countries, focusing on the experience of nine cases, mostly in Latin America. He stresses the adverse impact on the development prospects of these countries resulting from the adjustment policies that they have required to pursue.

Carvounis criticizes the current austerity-oriented approach to restoring orderly debt-servicing, maintaining that his emphasis is leading to severe economic, political, and social problems within these countries. He argues that the economic capacity and political will of borrowing countries to continue this route is dissipating.

Carvounis concludes that a preferable alternative to dealing with the debt-servicing problem is to provide borrowing countries with reinbursable interest capping to protect them from high and unpredictable real rates of interest and to provide these countries official guarantees on new loans/investment as a means of channeling fresh external capital. ...

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