Debts of developing countries

Vol. 8 No. 1 (1988)

Jan-Mar / 1988
Published January 1, 1988
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Dornbusch, Rudiger. 1998. “Debts of Developing Countries”. Brazilian Journal of Political Economy 8 (1):13-49.

Debts of developing countries

Rudiger Dornbusch
Massachusetts Institue of Technology, Cambridge, Massachusetts, EUA.
Brazilian Journal of Political Economy, Vol. 8 No. 1 (1988), Jan-Mar / 1988, Pages 13-49


This paper deals with the U.S. interest in the world debt problem. According
to the author, the debt problem (1) affects the profitability and even the stability of the U.S.
banking system; (2) is a part of the U.S. trade crisis, and (3) is a major foreign policy stake
in the debt crisis in that debt collection brings about social and political instability. The author
shows the debt facts and the origins of the debt problem analysing the major problem
of debtors. In the general framework named “transfer problem” is discussed the problem
of debt service where the author presents a case study of Mexico and Brazil. He concludes
showing five alternative solutions to the debt problem: an improved world macro-economy,
a facility, debt-equity swaps, a reversal of capital flight, and Bradley-style debt relief.

JEL Classification: H63; F34.

Keywords: External debt capital flows debt crisis