The foreign debt of the less developed countries (LDCs) of the Third World now stands at around $600 billion. More than half of this—about $350 billion—is owed to private international banks. Events like the strikes and demonstrations in Brazil this summer, or the labor unrest that triggered the mil
The foreign debt of the less developed countries (LDCs) of the Third World now stands at around $600 billion. More than half of this—about $350 billion—is owed to private international banks. Events like the strikes and demonstrations in Brazil this summer, or the labor unrest that triggered the military coup in Turkey in 1980, demonstrate the critical relationship of the foreign bank debt to political developments within the LDCs themselves. The crisis, however, is not confined to the debtor countries alone. The chairman of the Federal Reserve Board, Paul Volcker, recently asserted that “the effort to manage the international debt problem goes beyond vague and generalized concerns about political and economic stability of borrowing countries” and “encompasses also the protection of our own financial stability and the markets for what we produce best.” [1] A classified National Security Council (study prepared for the Reagan administration this spring argues that economic recovery in the US and other industrialized countries will allow the LDCs to increase exports and thereby earn the foreign exchange to pay off their creditors. This conclusion apparently stimulated strong dissent among some CIA and NSC staffers who see this projection as much too optimistic and who fear that “the problem could become unmanageable in the next 12 to 18 months, even with fairly strong economic recovery.” [2]
There is a strong tendency, well-nurtured by the political establishment in Washington and the major media, to understand this crisis as the combined result of the “extortionist” demands of the oil producers and the inherent imprudence and profligacy of Third World societies. In this interpretation, the “oil shocks” of 1973-1975 and 1979-1980 drove the oil-importing LDCs to borrow heavily, while simultaneously flooding the Euromarkets with petrodollars available for lending. OPEC remains at the center of this construction: shoveling surplus funds into the Euromarkets, which shoveled them back to the oil importing countries of the Third World, which shoveled them right back into OPEC’s coffers.
This interpretation is seriously flawed in its historical perception, in its statistical calculations and in its line of analysis. Historically, the big upsurge in commercial bank lending to the LDCs began around 1969-1970. In 1973, before the oil crisis, Geoffrey Bell noted that
the area of most rapid expansion over the next few years seems likely to be outside of the United States and Western Europe and already there is evidence that this business is growing rapidly. In the year to October 1972, London-based banks increased their loans to Latin America, Africa and the Middle and Far East by $6 billion and, based on impressionistic evidence, this rate of growth was even more pronounced in the early months of 1973. [3]
Indeed, medium-term Eurocurrency credits to non-OPEC LDCs grew more rapidly between 1971 and 1973 than between 1973 and 1974. They reached an annual rate of increase of 87 percent between 1972 and 1973, compared with a still considerable rate of 59 percent between 1973 and 1974. [4] By OECD figures, LDC debt to private lenders increased by 32 percent in 1971, 33 percent in 1972, 52 percent in 1973, and 32 percent in 1974. [5] By World Bank figures, total LDC debt to financial markets grew from $9.9 billion in 1971 to $22.7 billion in 1973, and then to $44.4 billion in 1975. [6] Thus major LDC borrowing from the international financial markets clearly began before the first “oil shock.”
Statistically, there are real problems with simply ascribing the increased volume of Euromarket lending of the mid- and late 1970s to increased OPEC deposits into the international banking system. Between 1974 and 1980 the OPEC nations deposited $155 billion into the world’s banking system; at least four fifths of this probably went to the Euromarkets. In the same period, net new international bank lending was $613 billion. In the three years from 1976 to 1978, OPEC countries deposited an average of less than $10 billion a year into the Euromarkets, while Euromarket lending averaged $76 billion a year. [7] No amount of deposit multiplication and maturity transformation would seem to be able to account for such disparities. Thus, as Edmar Bacha and Carlos Diaz Alejandro have pointed out:
It should be clear that the Eurocurrency market has a life and a financial role that are independent of OPEC surpluses.... The gross stocks of assets and liabilities in this market are only marginally influenced in a given year by net balance-of-payments flows.... The eruption of a new kind of capital exporter no doubt influenced many specific features of the evolution of financial markets during the 1970s. But even without OPEC, international capital markets would have expanded significantly during the 1970s. [8]
In a more analytical sense, it is quite useless simply to sum up current account deficits, compare them with new borrowing, note their similarity, and conclude without any prior investigation of the patterns and uses of such borrowing that banks are lending “for balance of payments purposes.” The perils of using undigested economic data for meaningful analysis are many: One is in fostering the illusion that, because non-OPEC LDC borrowings roughly approximate their post oil-shock current account deficits, this borrowing went to pay the borrowing nations’ oil bill. The fact that three major oil exporters—Mexico, Venezuela, and Algeria—are among the most heavily indebted LDCs should be enough to raise questions about the accuracy of this notion.
In fact, if one looks in more depth at the borrowing countries themselves and at the purposes to which borrowed funds have been put, a fairly clear picture emerges. [9] The overwhelming majority of all borrowing goes to the public sector—generally between two thirds and three quarters of all bank debt. Most, sometimes all, of the remainder goes to private firms who are encouraged to borrow abroad and given a government guarantee to do so. In the public sector, the debt is typically incurred by a few big state-owned basic industrial enterprises—steel mills, shipyards, railroads, petroleum and petrochemical complexes, telecommunications and electric power networks, oil and natural gas extraction. These are the basic industrial sectors which provide inputs for domestic industry, or which lead the country’s exports. Other big public-sector borrowers are national development banks, which generally use borrowed funds to finance domestic industry (or sometimes agribusiness) in those areas the government is attempting to encourage. Private borrowers are generally either firms in favored industrial sectors, or banks which are encouraged or forced to pass along the borrowed capital to domestic industry. The distinct tendency has been to use foreign borrowing to stimulate the expansion of basic industrial sectors crucial to national industry or agribusiness and (either directly or indirectly) of modern sector (“non-traditional”) exports.
Thus one way to consider the nature and significance of the Third World’s debt to the international financial markets is to see it as representing one part of a larger transformation in international investment patterns. The particular form this investment has taken is directly related to the rise of LDC capitalist classes with a substantial political and economic capacity—while still closely tied to international capital. The rationale is simple and straightforward: the borrowed funds will be used to finance new investment, and the new productive facilities will either produce or stimulate the production of goods whose export will pay the service on the new debt, leaving the nation with new factories, the banks with their debts being serviced, and the international trading system with dynamic new exporters.
That the system has, after some 15 years, come to a grinding halt since 1981 is no argument that it did not have at least some of the desired effects. Mexico, Algeria and other hydrocarbon exporters made massive new investments in the extraction and refining of petroleum and natural gas with foreign borrowing. The overall industrial and specific export capacity of the indebted LDCs was impressively enhanced. The fact that most current borrowing is going simply to “roll over” existing debt is no evidence that this previously incurred debt did not have these desired effects.
It is not that by some magical application of foreign funds LDC bourgeoisies were somehow able to transform “their” economies into autonomous entities. The current crisis has done away with any remaining illusions about the newfound economic independence of the more advanced LDCs. But it is one thing to be a neocolonial raw materials producer with no substantial industry, no significant domestic market, no proletariat or bourgeoisie to speak of—which is the situation in many of those parts of the world now becoming known as the “Fourth World”—and quite another to have major modern industrial facilities, often dominating the local economy, a large and growing home market, a well-developed domestic financial system, a thriving bourgeoisie and an industrial proletariat that is in some cases proportionately larger than in certain advanced capitalist countries.
The point is simply that foreign borrowing is one form of foreign investment. While multinational industrial corporations engage in foreign direct investment, multinational banks might be said to engage in foreign indirect investment—they lend the money to domestic public or private entrepreneurs who apply it to the local economy. The bankers themselves certainly see their role as one of investors. International banks are attracted to borrowers by many of the same factors that attract multinational corporations. The impulse for LDC borrowing comes—as in the case of foreign direct investment—just as strongly from the lenders as from the borrowers. The current confusion on this count indicates a remarkable historical ignorance. Foreign lending, historically, has been the norm, while foreign direct investment is a more recent phenomenon, tied especially to the particular pattern of US international economic expansion in the 1920s and again after World War II. Before World War I, international investment was overwhelmingly of the portfolio (lending) variety; even in the US case, between 1914 and 1930 almost three quarters of private US overseas investment was in the form of foreign bonds floated on the New York market, with barely one quarter in the form of foreign direct investment. [10]
One of the more important developments in international investment over the past 20 years is the change in the form in which foreign capital has “migrated” to the LDCs. The Latin American case, for which data are readily available, is a good example. While in the 1960s foreign direct investment accounted for about 30 percent of all foreign capital inflows into Latin America, with bank loans and bonds accounting for 10 percent, in the 1970s the multinationals’ share had dropped to 21 percent while the share of private international financiers had risen to 59 percent. [11] Certainly not all of this bank and bond finance went to productive investment, but the generally increased importance of this form of international investment is clear.
The remarkably high levels of foreign financial investment in the LDCs have gone hand-in-hand with more general changes in the patterns of investment. These “new forms of foreign direct investment” include a number of innovations. [12] The most all-encompassing is known as “unpackaging investment.” In the past, a multinational corporation would provide the foreign capital, technology, managerial expertise, and often personnel to build and run a new factory in a country. More recently these different elements of industrial expansion have been divided between foreign industrial firms, consultants and banks, on the one hand, and the local government and local private firms on the other. Thus a country, instead of inviting IBM to set up a subsidiary in its market, might purchase the know-how from a smaller foreign firm, buy the necessary equipment from a variety of foreign suppliers, hire foreign consultants to help set up the project, borrow the necessary capital from foreign banks, and use domestic resources—such as a state-owned corporation, private suppliers and a local training program—to round out the new establishment.
Such an arrangement is convenient for all involved. The local participants—whether government or private—maintain a measure of control over the new plant; the foreign partners receive welcome orders without taking the economic and political risks often associated with foreign direct investment; the banks get in on a project that, because of the combination of local and foreign guarantees, is doubly safe. The local partners, in return for a greater measure of direct control, become responsible for the day-to-day details of setting up the plant—tasks which can run from obtaining legal permission to repressing the local labor movement. The foreign partners are able to earn guaranteed (even if sometimes reduced) profits without risking local political or economic entanglements. The system is analogous to the process visible in virtually all Third World oil-producing countries following the nationalizations of the early 1970s: Production facilities in the hands of the state are often run by foreign firms under contract, sales are often made directly to these same or other foreign firms, financing, where necessary, comes from foreign banks, all are assured a set proportion of the profits.
The impulse for these “new forms” is generally twofold. First, multinational corporations have become increasingly aware of the potential danger of direct involvement in a frequently hostile or unstable environment, and they often welcome, even encourage, a greater degree of local participation. At the same time, portions of the local capitalist class are hungry for “a piece of the action,” and are able to take advantage of the new arrangement to strengthen their domestic position. Some may scoff at, say, the independence of Pemex, the Mexican state oil firm, which has used foreign capital, suppliers and consultants to expand. Yet for Mexican industrialists, an enlarged and modernized Pemex can be used as a ready source of orders for equipment produced locally and as a source of subsidized energy to fuel local industry.
There are a number of features common to virtually all LDCs that have participated in the most recent round of international debt expansion, using massive foreign borrowing to finance domestic investment. Apart from the general acceleration of capitalist development, we can point out several rather specific consequences.
Perhaps the most striking is the presence, in virtually all heavily indebted LDCs, of a powerful state sector with equally powerful economic ramifications. The typical indebted country has a state sector which controls most or all of development banking, telecommunications, electric power production, petroleum, steel production, and often other basic industries and commercial banking. The relationship with foreign debt is not difficult to fathom: International banks feel far more comfortable dealing with national authorities than with private Third World firms. Bankers invariably argue that their LDC loans are relatively safe because nations, unlike firms, do not go bankrupt. Their loans are based on the belief that LDC governments will find it politically impossible to renounce their debts, while private enterprises can easily decide to declare bankruptcy. Thus the international banks have done virtually all of their LDC lending to or through the LDC public sector.
The two cases which are most often used to refute this are South Korea and Chile. In the Korean case, the argument is based on ignorance: the Korean state is very heavily involved in the economy, despite its free-market rhetoric. The public sector is directly responsible for between one third and one half of all investment in the economy, and has accounted for as much as two thirds of all financial intermediation. [13] This does not include the close informal cooperation between government and private industry; the major Korean conglomerates’ “intimacy with government policymakers,” in the words of one business magazine, “makes ‘Japan, Inc.’ seem like economic anarchy.” [14]
Pinochet’s Chile is an even more interesting case. Chile’s foreign debt was indeed, in its majority, owed by the private sector without government guarantees. The maniacally laissez-faire Pinochet regime declared publicly on numerous occasions that the Chilean government assumed no responsibility for the private sector’s debt. Yet when the economic crisis hit in 1981, the international banks simply told Chile, in effect, that they demanded government support for the private debt; without it, they would refuse to renegotiate the public-sector debt. It is even reported that the international banks used the threat of cutting commercial credit lines to battle against Pinochet’s refusal to nationalize in effect the private-sector debt. This was the same tactic they used during the Allende regime to protest the Popular Unity government’s far-reaching nationalizations. [15]
Thus indebted industrialization has implied a financially—and, by extension, politically—fortified public sector. Another common feature, also easily understandable, is the emphasis on export expansion common to indebted LDCs. In order to service their mounting debt, the Third World states must stimulate rapid export growth. This can mean dramatically expanding petroleum exports, as in the case of Mexico, or emphasizing manufactured products, as in the cases of Korea or Brazil. It can involve commercial openness to encourage international competitiveness or, more commonly, financial and tax incentives to spur exports. In any case, the indebted LDCs have become tightly integrated into international trade, hand in hand with—and partly because of—their tight integration into international financial markets.
These two observations underline a certain paradox in the development of the heavily indebted LDCs. As they have become more and more integrated into international capital and commodity movements, the LDC local economic actors—whether in the state or modern private sector—have become even stronger. This, of course, goes against the received wisdom of dependency theorists who argue, like Immanuel Wallerstein, that “states in which peripheral activities are concentrated are conversely weak, and are weakened by the very process of economic peripheralization.” [16] Yet it should seem obvious that access to foreign capital and markets, by supplementing domestic finance and demand, will strengthen those LDC firms able to tap into the foreign sector. They may become more dependent on foreign financing or orders for their continued wellbeing, but so too do American firms who invest or sell abroad. The converse of this is that in times of international crisis, such as today, those LDC economic sectors most tied to the foreign sector find their economic, and eventually political, position in society under attack from competitors for power—more nationally oriented businessmen or farmers, remaining pre-capitalist economic power blocs, and so on.
This leads to a broader consideration of the significance, and ultimate consequences, of the financial boom of the past 20 years. The question comes down to the long-standing debate over the effects of foreign capital in the Third World: does it “enhance development” or “perpetuate underdevelopment.” The two poles of the debate are fairly well known. On the one side are the more categorical dependency theorists, who see foreign investment—whether of the direct or financial variety—as simply one more means to subjugate the capital-importing LDCs to the dictates of international capital. By extension, this view denies the possibility that international economic integration can take place in such a way as to strengthen domestic LDC capitalist development or local bourgeoisies.
On the other side of the argument are such “developmentalist Marxists” as the late Bill Warren. [17] Warren and his disciples see foreign investment as a stimulant to the development of independent capitalist systems in the capital-importing LDCs. Thus, Warren writes, “within a context of growing economic interdependence, the ties of ‘dependence’ (or subordination) binding the Third World and the imperialist world have been and are being markedly loosened with the rise of indigenous capitalism.... We are [thus] in an era of declining imperialism and advancing capitalism.” [18]
The argument—or at least those parts of it which I consider useful—is really over the best manner of describing the reality of the more advanced LDCs: are they simply being manipulated by international capital, or are they developing local bourgeoisies with a significant degree of control over the economy? Translated into political terms, does it make more sense for the left to ally with local nationalist forces—including especially segments of the local dominant classes—against foreign capital, or to aim all efforts at combating capital itself, especially the local variant? It is in this light that the question has some significance.
Without pretending to resolve a debate that has been going on at least since Marx wrote on British colonialism in India, I will present here a few observations drawn from the realm of international finance to try to make a very simple point: the more advanced LDCs are characterized by an increasingly dynamic and self-reproducing local capitalism. It would be a mistake, though, to conclude from this that they are no longer subject to major—often overwhelming—direct and indirect political and economic pressures from the capital-exporting nations, pressures that seriously compromise any attempt at national economic autonomy.
The power of Warren’s argument stems precisely from its ability to explain those elements of contemporary LDC industrialization we have mentioned, which dependency and other underdevelopment theorists often find inexplicable and therefore often declare nonexistent. Yet the explanatory power of Warren’s view—that capitalism is developing apace, on a national level, in an increasingly autonomous fashion—is itself limited by its neglect of several features of LDC economic growth. Two of these concern international finance directly: the importance of foreign capital in funding and defining LDC national economic development, and the explicit and implicit controls that private and public creditors impose on LDC borrowers.
Even a cursory look at the borrowing countries will show that they have come to depend crucially on major inflows of foreign capital to finance their domestic investment programs. These programs are an integral part of the development and maintenance of economic and political power blocs in the countries in question. The state succeeds in holding together different sectoral and regional segments of the local bourgeoisie precisely because it disposes of enormous financial resources—largely borrowed—that it can dispense directly or indirectly to those necessary for its continuation. Yet this dependence on foreign finance—and similarly on foreign markets to earn the foreign exchange necessary to service their debts—subjects these states to general pressures exercised by fluctuations in financial and goods markets, and to the specific pressures brought to bear by creditors and their representatives.
The cost of existing and potential LDC debt is variable, and fluctuates according to factors almost entirely external to them—such as US monetary policy or a Polish default. Thus the heavily indebted LDCs can, practically from one day to the next, find themselves faced with unexpectedly high interest rates, and a previously manageable debt can become suddenly a tremendous burden on the economy. The same is true, of course, of Third World exports, although goods markets tend to change direction much more slowly than financial markets. Even the “best-behaved” indebted LDCs can be thrown into the throes of a debt crisis through no fault of their own.
The results of these debt crises themselves are generally reducible, in a somewhat simplistic way, to one constant: direct pressure from international financiers to sacrifice the domestic economy in the interests of maintaining international financial solvency. Even without a debt crisis, the international financial system has ways of attempting to ensure that the rules of the game are followed. Should a borrowing nation pursue policies deemed inappropriate by current or potential creditors, pressure can and will be exerted to set the nation back on course. This pressure need not be direct, although certainly major debtors and creditors continually exchange views; the creditors’ assessment need only take its natural course in the market and the borrower will find a significant hardening of the terms offered it when it tries to borrow. When a nation’s economic and political plans—indeed, the often delicate balance of domestic political forces—depends on continued access to foreign finance, real or potential restrictions to this access are a powerful argument for a change in course. Sometimes the new course is the preferred course of the regime, and foreign financiers simply provide a convenient excuse (or scapegoat) for a politically unpopular policy. Either way, heavy reliance.on Euromarket borrowing plays a major role in defining national policies.
In the extreme cases, in which borrowing LDCs have run into major debt servicing problems, the domestic repercussions of foreign indebtedness are even more direct. The insolvent debtor generally ends up calling on the IMF, whose outlook is pretty much identical to that of private lenders, for an economic stabilization package. In return for the bailout, the borrower agrees to far-reaching economic reforms to bring its economy back into line. One extreme consequence of an LDCs integration into international financial markets can be the appointment of IMF managers to run major portions of a country’s domestic economy. A refusal to play by the rules, as the experience of Jamaica showed, can lead to a major economic and political upheaval. In such cases, it is clear that LDC economic autonomy is a relative thing. Such extreme measures are usually unnecessary. In a recent survey, the national economic authorities in ten of the 12 major Latin American countries viewed rehabilitating the balance of payments—and thus maintaining international creditworthiness—as their highest priority, above ensuring domestic economic growth or reducing inflation. Third World governments, and the local capitalist groupings they support and that support them, appreciate the liquidity that foreign finance can provide, and they are glad to be able to purchase domestic economic expansion and political legitimacy on the Euromarkets. The price, they often find, is higher than they bargained for.
The integration of the more advanced LDCs into the international financial system has indeed speeded up capitalist development in the heavily indebted countries, and fortified the economic and political position of those dominant classes or class fractions that have had access to foreign finance. Yet it has also made the pattern of this capitalist development, and the strength of these dominant elites, extremely susceptible to changes in external financial conditions. It is especially in times of trouble, such as today, that this contradiction becomes clear. For the current crisis is the result of economic and political events almost entirely external to the borrowing countries, and its evolution will be defined by equally external actors.
The debt crisis that began in late 1981 and that—official optimism notwithstanding—shows no signs of disappearing, is the result of the accumulated economic and political problems of the 1970s. The two proximate causes were the dramatic rise in US interest rates that began in 1980 and the related international recession that began at more or less the same time. Since every percentage-point rise in international interest rates adds over half a billion dollars to the debt service payments of a Brazil or a Mexico, and since the international recession drastically reduced the market for exports of the heavily indebted countries, these countries found their interest payments soaring just as foreign currency receipts from export sales were stagnating. By 1981, a whole series of borrowers were paying half of their export earnings just to service their debt: One fifth is considered a marginally healthy proportion. Practically frozen out of long-term borrowing by the skittish banks, and hoping for a rapid recovery and a decline in interest rates, the major borrowers covered their shortfalls by borrowing massively at short term. The short-term debt of the 20 largest borrowers, who account for nearly all of Third World bank debt, increased by 50 percent in 1981 alone. As the recession drags on, interest rates remain high; as debt came due, 1982 turned into a nightmare. Debt service payments as a proportion of total exports reached or topped two thirds in Mexico, Brazil, Argentina, Chile and Ecuador, hitting 98 percent of exports in Argentina. For the 20 big debtors, the average was 38 percent, nearly double the danger mark.
Of course, the sudden squeeze was as frightening for the international banks as it was for the debtor countries. The banks depend on the solvency of their clients as much as the clients themselves do. The financiers attempted to shift the problem from the private to the public sphere. After all, international debt had grown with the implicit guarantee of the industrialized countries, and especially of the United States, to back up the international financial system if necessary in order to maintain their openness to Third World imports. Yet by the early 1980s the governments of the major lending nations were less and less able to meet the demands of “their” banks: the crisis had mobilized major sectors of the domestic political economy who are interested precisely in combating the kind of international openness the banks depend on. Just as the banks’ clients were in desperate need of even more access to the US market, for example, dozens of American industries were seeking to close the market even further. Just as the debt crisis demanded a major financial commitment from the US to increase the IMF’s ability to police the system, this commitment became a target of everyone from farmers to industry to labor in the United States.
After the September 1982 IMF-World Bank meetings, which reaffirmed the political inability of the industrialized countries to bail out the banks or their borrowers, the system fell apart. The international financial markets practically dried up, dozens of countries teetered on the brink of default, and no easy solutions presented themselves. The initial crisis was partly overcome by emergency lending from the Federal Reserve System, the US Treasury and the Bank for International Settlements; by IMF austerity programs and emergency bank loans; and by the hope of an economic recovery in the industrialized countries. Yet the recovery is almost certain to be short-lived; when it ends, the crisis will recur, with no change in the political and institutional inability of the bankers, the United States, the other industrialized countries or the borrowers to solve the problem once and for all.
The current impasse can only be unfrozen in one of three ways. Either the industrialized countries and the debtor countries will eliminate or overcome the political opposition to international financial openness—beating back, for example, protectionism and anti-bank sentiment in the US and similar movements in the borrowing nations—and proceed to negotiate an organized bailout. On this basis, international debt might once more begin to grow, albeit on a reduced scale. The second option is for “economic nationalists,” both in the industrialized and in the developing world, to defeat their finance-oriented opponents. Here the most likely outcome is a return to 1930s-style de facto trade and currency blocs, as the capitalist world recoils from the financial integration of the past 20 years. For the debtors this might well mean a return to the import substitution of the Depression and World War II, but this time on a far more developed basis—thanks to their recent indebted industrialization. A third option is, simply, chaos, with no one state or group of states capable of holding the system together. What will emerge from chaos is anyone’s guess. Unless conditions (especially within the United States) change fast we are headed for just such an outcome when the next downturn begins.
International finance undoubtedly made good times better—if by “good times” we mean rapid growth for local capitalism in the borrowing countries. Now, international finance is unquestionably making bad times worse—by provoking a crisis whose depth and length is, in many cases, unprecedented in the indebted countries. How much worse things can get before provoking a political explosion remains to be seen.
[1] New York Times, June 4, 1983. [2] New York Times, April 19, 1983. [3] Geoffrey Bell, The Euro-dollar Market and the International Financial System (New York: John Wiley and Sons, 1973), p. 105. [4] R. C. Williams et al, International Capital Markets (Washington, DC: International Monetary Fund, 1980), pp. 54-55. [5] Organization for Economic Cooperation and Development, Development Assistance Committee, Development Cooperation: 1977 Review (Paris, 1977), p. 211. [6] World Debt Tables: External Public Debt of LDCs (Washington: World Bank, 1975). [7] R. C. Williams et al., International Capital Markets 1981, IMF Occasional Paper 7 (1981), p. 46. [8] Edmar Lisboa Bacha and Carlos F. Diaz Alejandro, International Financial Intermediation: A Long and Tropical View, Princeton Essay in International Finance 147, Department of Economics, Princeton University, 1982, pp. 8-9. [9] A preliminary attempt at this is my “Third World Indebted Industrialization,” International Organization 35/3 (Summer 1981). [10] See, for a comparison of the periods, my “International Finance and the Nation-State in Advanced Capitalist and Less Developed Countries,” Revista de Economic Politica (Sao Paulo), forthcoming. [11] Inter-American Development Bank, Economic and Social Progress in Latin America: 1979 Report (Washington, 1980), p. 85, and Economic and Social Progress in Latin America: The External Sector (Washington, 1982), p. 165. [12] On these new forms of foreign direct investment, see, for example, UN Center on Transnational Corporations, Salient Features and Trends in Foreign Direct Investment (New York, 1983). [13] Leroy Jones, Public Enterprise and Economic Development: The Korean Case (Seoul: Korea Development Institute, 1975), pp. 85-90. [14] Institutional Investor, May 1979, p. 122. [15] I am indebted to Carlos Diaz Alejandro for these insights. [16] Immanuel Wallerstein, The World Capitalist Economy (Cambridge: Cambridge University Press, 1979), p. 274. [17] See especially his Imperialism: Pioneer of Capitalism (London: Verso, 1980). [18] Ibid., p. 10.
