A Note on the problems, of the International Indebtedness of Developing Economies: Issues and Prospects
THE WORLD financial system has, in the last few years, been racked by a crisis of major proportions—that of debt servicing by developing countries. Indebtedness has grown rapidly through the 1970s and the 1980s to levels, where the export earnings of the LDCs are proving inadequate to service their debt obligations. The creditors—commercial banks, international institutions and individual governments—are seeking to devise new mechanisms to guarantee an uninterrupted flow of debt service payments from the LDCs. These mechanisms seek to extend the process of subordination of developing economies to global capital. Traditional forms of neo-colonial control—foreign investment, terms of trade, "aid" through official ^agencies .political and military pressures—are being supplemented and, in the process, transformed. Heightened subordination to global capital cannot but further dilute and eventually nullify all attempts by LDCs towards even a nominally independent path of capitalist development. Such a retrogression has the potential to make the 'neo-neo colonialism* look rather much like the old colonialism. One does sec the evidence of this in the making. On the other hand, international capitalism is also beset by a type of crisis, which will continue to have an independent role in accentuating indebtedness, although in a sense it will increase the vulnerability of global capitalism. This combined with the "restructuring" process, fitting out the LDCs to abject dependence, has the developing countries caught in a vice. The objective conditions of the post - Second World War period, which facilitated some measure of independent, albeit limited, capitalist development in the Third World, have to all appearances been seriously exhausted.
aggregate net indebtedness ofLDCs' at the end of 1983 was $ 761,000 million-. Long-term and medium-term debts^ comprised $ 597,600 million, representing a 774% increase over the 1970 level of$ 68,400 million and implyling an annual growth rate' of 18.1% per annum. Indebtedness accelerated through the seventies and the eighties. While total net borrowings increased over the 13 year period 1971-1983 by $ 5 29,.'2 00
'An ctonomist working in New Delhi