INTL DV 110 Chapter Notes - Chapter 4: Paradigm Shift, Global Commons, Neoliberalism
30 Mar 2021
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Between 1976-1992, total foreign debt of developing countries increased from billion to over . 6 trillion. High cost of national industrialization (state-led development promoting isi) Growing reliance on agricultural imports and costly (and often ineffective) development projects. Good climate for lending and borrowing in 1970s! Third world governments could get low interest loans and negotiate flexible debt repayment plans (mostly for paying off interest on old loans) New york investment banks eager to invest in third world governments ( safe bet ) Value of us dollar: float not fixed. Floating usd transfers risk to other countries with large holdings of usd. Rise of speculative currency markets increase significance of usd. Shock of the 1980s: change in us monetary policy. Volker shock: rise in interest rates by us federal reserve. Third world debts (designated in usd) increased substantially. Threat of default by mexico jeopardize wall street banks.
