International Monetary and Financial Issues from a National Perspective: a Comment
Edmar Bacha is correct in emphasising the dramatic improvement in the access of middle-income developing countries, and especially those of Latin America, to the capital markets of the North. This transformation, well under way even before the new surpluses of the oil exporters began to fuel the Eurodollar market in 1974, has had a series of profound effects; it has permitted accommodation of record developing country deficits on current account to finance continuing economic growth despite world recession and increased import requirements; it has changed the composition as well as the quality of capital inflow, diminishing the importance of both public concessional long-term finance and foreign direct investment in favour of private short- and medium-term debt; and it has diversified the linkages of these middle-income countries to a wider variety of financial centres in the North. All of these add up to a different style of economic integration between South and North, and one in which the lowest income countries have been prejudiced.
KeywordsExchange Rate Regime Capital Inflow Financial Integration Foreign Debt International Capital Market
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