Beim, David O.
July 1977
Foreign Affairs;Jul1977, Vol. 55 Issue 4
For the first time in many years, a large number of people have begun to worry whether the countries could service all of the debt they are incurring and whether the banking system, particularly the large, international U.S. banks, could go on accommodating their increasingly strained financial position. One can reach different conclusions on this issue by pointing to different factors. There are worlds of differences among developing countries. One can navel to many parts of Latin America and find regions closely resembling Western Europe. One can also travel to parts of the world where the poverty is so extreme and the resources so limited that the situation seems quite hopeless Yet all of these are referred to collectively as the less developed countries. The first step toward understanding the LDC debt problem is to realize that the poorest countries have very little of the bank debt, basically because no bank would lend to them It happens that Brazil and Mexico taken together represent about half of all the LDC bank debt outstanding countries account for more than 80 percent of such debt, namely Brazil, Mexico, South Korea, Taiwan, the Philippines, Argentina, Peru, Colombia and Israel These countries are quite well along in terms of development. The most severe problems occur in countries that have accumulated debt and do not have the development level to carry it.


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