POLI 445 Lecture Notes - Lecture 12: Government Debt, Interbank, Prime Rate
30 Jan 2018
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Lecture 12 - debt crisis of the 1980s. Lots of usd on the european market (mostly: eurodollar market had emerged, 1970s: private sources of usd available for lending (can be traced back to practices from the. Us financial system would expose them to being under sanction by the us gov. In the 1950s and 60s, countries were scrambling to get mncs to come in (mncs had tech and capital) If you couldn"t get them to operate in your country, you were left out. States pursuing isi (import-substitution industrialization) find it attractive, but are vulnerable: countries that found indebted industrialization attractive were those that were following an. Several dimensions of risk assessment to determine how much/if anything will be lent. Interest charge on international loans reflects risk: economic risk - what is this money being spent on, will it earn a return, so that you can pay back the bank, political risk - very important.
