Crisis, the Burden of Foreign Debt, and Structural Dependence

Abstract

Since 1982 the problems of Latin America's foreign debt have been headline news. Prior to that, indebtedness was a cause for pride among political and business leaders because they believed the growing debt reflected the confidence of international banking in the apparent soundness of Latin America's economies. At the present time the debt is not only a daily reality, it is also a cause of growing preoccupation. Everyone is beginning to make the connection between the payment of the debt and the deteriorating conditions of their life and work. This article attempts to advance the study of Latin America's external debt. It analyzes the historical process of indebtedness, the causes and factors conditioning its origins and rapid growth, the internal utilization of the loans obtained, and the impact of debt service on economic growth and the accumulation of capital. Although several of the hypotheses set forth in this work are applicable to Latin America as a whole, they are mainly founded on the Mexican case.