External borrowing and the debt problems of some Caribbean nations

Abstract

This paper compares and analyses the growth, structure and impact of external borrowing as a means of financing economic development, during the past two decades, in the more developed anglophone nations of Barbados, Guyana, Jamaica, and Trinidad and Tobago. In the present international economic context, the transfer of financial resources from the developed nations to the developing nations is a factor whose potential effects are of major importance for re-establishing the general trends of economic progress. To the traditional role of those financial resources as a complement both to domestic savings and to the current foreign exchange inflows required for increasing investment and the rate of economic growth and social progress of the developing countries has been added in the last five years the task of contributing to the world monetary equilibrium and the adjustment to unprecendented external deficits caused by the recession of the industrial economies and the rise in fuel prices. By the end of the 1940's capital flows to the developing nations were marginal. Some Third World countries had accumulated large international reserves after the Second World War as a result of relatively high prices for their exports. But the situation changed rapidly as the flows between the developing and developed nations were reversed and official transfers became important (Hughes 1979 : 99). The experience of the 1960 's and the early years of the 1970's brings out the generally positive results of the contribution of international financial cooperation to the acceleration of the economic growth of the developing