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INTD 200 (186)
Lecture 7

Lecture 7: Debt and Structural Adjustment

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International Development
INTD 200
Warren Allmand

Lecture 7: Debt and Structural Adjustment 12/16/12 9:22 AM International Debt Crisis 1970s: era of surplus capital and loan pushing End of 70s: economic crisis • Imposed Neoliberal policies Early 80s: increased interest rates • Movement of south to north • Imposed by Ragan • Too high for these countries to pay à take loans to pay interest on loans they had taken 1982: debt crisis in South, Mexico, Brazil, Argentina, Poland default on loan payments • worried about a massive breakdown of the banking system Restructuring of debt payments, borrowing/lending of more money to pay debt interest • Allowed a longer repayment time • More money loaned and borrowed • Interest charged on interest • Movement of capital from the south to the north Structural Adjustment Programs (SAPs) Reversion to free market: Neo-liberalism 1. Promotion of free trade and mobilization of domestic production for the market • Generation of foreign exchange revenue from increased export of tradition commodities (produced by the country) o Export promotion, comparative advantage, first world benefitted • Currency devaluation • Promotion of free trade/economic liberalization o Removing trade barr
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