Rescuing the LDCs

Analysis of the debt accumulated by less-developed countries (LDCs) leads to a recommendation that the U.S. and other developed countries maintain current account deficits to make it easier for the LDCs to purchase goods and services. International trade policy is too complicated to finance LDC borrowing needs and maintain trade barriers at the same time. An effort to retain LDC access to markets is valid in order to maintain their ability to purchase our manufactured goods and to ease the repayment of debts to our banks. A review of LDC debt development separates commercial (those having access to commercial banks) and aid-dependent (those relying only on foreign aid) countries and uses the examples of Argentina, Peru, and Zaire. Excessive debts can cause lenders to press for slower economic growth, resulting in recession and political unrest. A better solution is seen in the current account deficit since it would stimulate the LDC's economy by easing trade barriers and would let them repay their debts by claiming foreign bank deposits or purchasing U.S. notes and bills. (DCK)

Business · Development economics · Economics · International trade · Political science · Global Financial Crisis and Policies

• Escaping the rural energy dilemma

  Open Access•John H Ashworth, J Neuendorffer et al.•World Development•1982

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• Technology diffusion through foreign assistance

  Open Access•John Ashworth, John H Ashworth•Policy Sciences•1980

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• Political Strength, Economic Structure, and the Debt Servicing Potential of Developing Countries

  Open Access•Lewis W Snider•Comparative Political Studies•1988

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