Debt and Transfiguration? Prospects for Latin America's Economic Revival.

• Author: McDonald, Judith A.

Edited by David Felix. Armonk, N.Y.: M.E. Sharpe, Inc., 1990. Pp. xxiii, 302. $45.00.

This book grew out of a conference entitled "Financing Latin American Growth in the 1990s" which took place in October, 1988. Although there is a plethora of books that study the Latin American debt crisis, what distinguishes this volume is its high quality and balanced presentation: all viewpoints--those of academics (economists as well as political scientists), politicians and bankers--are presented. However, as with most other books on this topic, this book was somewhat dated even as it went to press. Since the Brady Plan was instituted after the conference took place (March 1989), it is not dealt with very thoroughly. Although many of the papers can be used to evaluate the costs and benefits of the Brady Plan, this collection lacks in-depth analysis of the Plan itself and its potential effects.

The key themes echoed by politicians, political scientists and economists alike are the importance of economic growth and the incompatibility of growth and full debt servicing. Major debt relief is needed for any growth and stabilization program to succeed. All participants feel that the debt strategies tried up to October, 1988 failed to accomplish the basic objective of restoring growth in Latin American countries. Consequently, this book can be viewed as strong support for the debt reductions contained in the Brady Plan.

Various authors claim that the desirability and indeed inevitability of debt-service is due to changes affecting the debtors (as Lessard says "debt burdens, whether or not economically repayable, are politically intolerable"), creditor governments and international agencies. According to Feinberg, it is in the interest of the industrial countries to restore growth to Latin America, to reopen export markets and to help stabilize the region's democratic institutions. Padoan emphasizes the need for a stable international environment.

There was also consensus on the need for new sources of external funding for heavily indebted countries. For example, Dornbusch and Rotberg agree that new money is necessary for growth, regardless of the risk that it may be used unwisely and unproductively. There was also wide-spread agreement that international loans should be made on a country-by-country basis and should be conditioned upon the design and implementation of necessary stabilization and strong structural adjustment programs.

There is some...