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I have to give a presentation arguing whether or not debt crises are the fault of debtor nations (looking specifically at 3rd world countries).
I think I'll focus on the Mexican crisis in the early 80's as there seems to be a lot of literature on the subject.
The basic gist, as I understand it, is that following the quadrupling of Oil prices in 73/4, the OPEC nations came by a LOT of cash, which the Banks in which it was deposited had little idea as to how to use it.
Conditions in the 70's were such that inflation outpaced growth in interest rates, meaning that 3rd world nations were literally paid to borrow money, encouraging imprudent borrowing (and imprudent spending of loans in a number of cases).
As conditions changed however (interest rates outpaced inflation, commodity prices fell, etc), it became clear to the debtor countries that they could not service their debt, so they defaulted.
The question of blame seems to be fairly complicated. The question is if the debt crisis (not the debt) is the fault of the 3rd world. Developed countries seem to be able to manage phenomenal amounts of debt without defaulting, so what is it about 3rd world nations that makes then susceptible to crisis?
I want to focus on Latin America (Mexico 1982).
I think I'll focus on the Mexican crisis in the early 80's as there seems to be a lot of literature on the subject.
The basic gist, as I understand it, is that following the quadrupling of Oil prices in 73/4, the OPEC nations came by a LOT of cash, which the Banks in which it was deposited had little idea as to how to use it.
Conditions in the 70's were such that inflation outpaced growth in interest rates, meaning that 3rd world nations were literally paid to borrow money, encouraging imprudent borrowing (and imprudent spending of loans in a number of cases).
As conditions changed however (interest rates outpaced inflation, commodity prices fell, etc), it became clear to the debtor countries that they could not service their debt, so they defaulted.
The question of blame seems to be fairly complicated. The question is if the debt crisis (not the debt) is the fault of the 3rd world. Developed countries seem to be able to manage phenomenal amounts of debt without defaulting, so what is it about 3rd world nations that makes then susceptible to crisis?
I want to focus on Latin America (Mexico 1982).
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