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).