Policy Sciences

, Volume 27, Issue 4, pp 365–394 | Cite as

International capital mobility and Third World development: Compatible marriage or troubled relationship?

  • David Felix
Article

Abstract

The current surge of foreign capital to the Third World resembles that of the 1970s. The channels are now different but the extra-regional flows are again predominantly to Latin America followed by East Asia. Many of the Latin American countries whose overborrowing brought on the 1980s debt crisis are again overborrowing to compensate for low savings rates and other structural flaws, putting their balance of payments at increasing risk. The likelihood that this time they can handle the rising debt servicing and impending slowing of the inflows sans prolonged crisis or a major retreat from their market liberalization policies is not very high, whereas the East Asian countries appear once more structurally capable of riding out the repercussions from an international financial market pullback.

Keywords

Structural Flaw Financial Market Latin American Country Saving Rate Foreign Capital 

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Copyright information

© Kluwer Academic Publishers 1994

Authors and Affiliations

  • David Felix
    • 1
  1. 1.Department of EconomicsWashington UniversitySt. LouisUSA

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