sunkel and griffith-jones, debt and development crisis in latin america

(31): US vs. Keynes at Bretton Woods -- ultimately former won out, which significantly reduced the scope of the international institutions that emerged

(32): 'conditionality' was part of US proposal

(33): ended up too small--only made a marginal contribution to funding of deficit countries

(34): ideally, would aid country w/ deficits

(35): Prebisch agreed that a transfer of financial resources to a country could help it, provided certain conditions were met

(36): imp--other agents stepped into the space not taken up by the IFIs. in 50s, foreign investors. in 60s, aid agencies. and in 70s, multinational banks.

(37): these flows in the 70s were themselves financed by massive influx of dollars into the US, of course

(37-38, see also 65): key--these private financial flows were very fickle, and always pro-cyclical -- dependent entirely on whether they saw a profit, or not (interest rates were also floating, which exacerbated the problems). this is in contrast, of course, to the way in which and reasons for which resources could have flown in, had the international system been better regulated/planned.

(39): convertibility to gold should have kept the holder of the reserve currency (i.e., the US) honest, since not maintaining a satisfactory payments position would cause a 'run on the dollar' (as it did during the Vietnam War--but then US got rid of the g. standard, of course)

(41): weakness of SDR--didn't become a substitute for gold and foreign exchange, but more of an afterthought

(42-43): with end of convertibility in 1970s, reserves skyrocketed.

(43): liquidity in 70s boomed. and, importantly, became a function of the market.

(45): Bretton Woods institutions, at their birth, reflected the dissatisfaction with laissez-faire after the G. Depression

(48): over post-war period, US foreign investment going more and more to 'developed countries', after being 50-50 after WWII

(49): in 60s, net transfer of 5.7 billion dollars out of LA

(50): Alliance for Progress as clear response to Cuban Revolution

(53,55): net flows during Alliance for Progress are in direction away from LA (private outflows exceed official inflows). despite this--in sum--it partly compensated these countries, in sharp contrast to the impact of private inflows in the 70s.

(58): after laissez-faire, there was protectionism at the periphery and at the center, remember

(61-62): financing to LA in 70s became much more private, multinational bank-centered, oligopolized. key--loans were taken to cover deficits, which were the result of the 'exhaustion of the ISI model', plus the jump in import prices.

(62): the petrodollars were recycled, not through a responsible international agency, but through these multinational banks

(62): IMF didn't help with this very much, at all. about 3.1 percent of CA deficit covered by them.

(65): critical--these private inflows were a colossal waste of resources, since they came in and were spent without a plan. a great increase in luxury consumption, armaments, and flight of capital.

(66-67): interesting story about the transition to less State intervention, in which all major actors seem involved [but the story is underdeveloped]

(71, 73): growth of Euro-currency market, from which Mexico and Brazil borrowed especially (but this is more than petro-dollar recycling, we're being reminded--the mkt starts in the mid-1960s). 50% of loans made, in late 1970s, were made to developing countries.

(73-75): imp--growth in lending driven, principally, by competition between multinational banks; not as much by changes in countries themselves (notes a few: expanded public investment, stagnation in official development assistance, loans w/ few strings viz-a-viz official assistance). borrower bore more risk, though

(77): by late-70s, burden is enormous (table)

(78): variable interest rates hurt LDCs severely--eventually, most borrowing was going toward paying off old debt

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1. causal story re: increase in 70s liquidity. ending of covertibility?

2. supporting agriculture at the center, after WWII? why, whom? (p. 58)

3. better developing the story told on pp. 66-67, about the transition to neoliberalism. surely there were major actors opposed, as well? (this relates to the 'discrediting' point, in Vivek--this can be an excuse that facilitates transition, but there have to be concrete interests behind the transition, as well)

4. birth of Euro-Dollar mkt in response to loopholes in regulations? larger shifts in economy? what's the best story, here? (not petro-dollars, I think that's quite right)