Pre-Game Show (Terms worth knowing)

1
Pre-Game Show(Terms worth knowing)

• GDP Gross Domestic Product
• HDI Human Development Index
• ISI Import-Substituting Industrialization
• FDI Foreign Direct Investment
• Gini Corrado Gini (Italy 1912)

2
Sovereign Debt and the Erosion of Sovereignty

• James Hayes-Bohanan, Ph.D.Professor of Geography
  Latin American StudiesBridgewater State
  University

J2000 GETTING INTO DEBT
3
Credit

• What is it for?

4
Big Projects
Aswan High Dam World Banks Kick-off Event
5
Petrodollars

• Literally Too much of a good thing!

6
Overlending
7
Commodity Earnings over Time
Raúl Prebisch, ECLA
8
Basta!

• Mexico Moratorium August 1982

Brazil followed Slow growth the lost
decade Inflation and hyperinflation Capital
flight Contagion effect
9
Baker Plan - 1985Treasury Secretary James Baker

• Loans to cover interest payments were made with
  conditions
• Privatization of state enterprises
• End to subsidies
• Opening the economies to foreign investment
• 12 of 15 large debtors complied
• Soon comprised 20 percent of all World Bank (WB)
  debt

www.ThirdWorldTraveler.com
10
Brady Plan - 1989Treasury Secretary Nicholas
Brady

• Sought to attract investment by reforming
  economies
• Encouraged cooperating private banks to reduce
  their claims against LDCs
• Used new IMF (International Monetary Fund)/WB
  funding to collateralize debts in the form of new
  bonds - in other words, multilateralized the debt

www.darbyoverseas.com
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Secondary Markets

• Reduced claims
• Writing down debt
• Dimes or pennies on dollars

12
Debt-Equity Swaps
13
Debt-for-Nature Swaps
14

• Baker and Brady Plans
• Liberalization
• Devalue currency
• Open markets
• Reduce government intervention
• Privatize assets

Whirled Bank A World Full of Poverrty
15
A Consensus?