EXTERNAL FINANCING AND DEBT OF THE LATIN AMERICAN COUNTRIES

Abstract

The flow of financial resources from industrial countries has always been and continues to be an important factor in the development process of developing countries, including those in Latin America. Its traditional role as a complement to both domestic savings and foreign exchange investment requirements has contributed to the economic growth and progress achieved in the developing world. It grew rapidly, especially in the 1970s, as the financial needs of the developing countries became more urgent. The total net flow of official and private financial resources provided by the industrial member countries of the Development Assistance Committee (DAC) of the Organization of Economic Cooperation and Development to the developing countries and multilateral agencies grew from an annual average of $22 billion in 1972–1974, to more than double that amount in 1975–1976. It reached $71 billion in 1978 and $74 billion in 1979. As a proportion of the gross national product of the DAC countries taken as a whole, this flow attained an average of 1.15% in 1975–1979, compared with rates of 0.65% and 0.95% between 1974 and 1961, respectively.