Economic Stabilization in Developing Countries

Economic Stabilization in Developing Countries

Economic Stabilization in Developing Countries

Economic Stabilization in Developing Countries

Excerpt

IN SEVERAL Latin American countries in the 1950s and 1960s, persistent inflation and balance-of-payments difficulties called forth a variety of policies for economic stabilization. More recently, in the 1970s, major international economic disruptions renewed the quest for economic stability as global inflation and the oil price shocks spread inflation and balance-of- payments deficits to virtually all developing regions. At the same time, many developing nations embarked on domestic programs that in themselves added further instability.

By the turn of the decade economic stabilization policies in developing countries had become a highly charged political issue. Were orthodox stabilization policies harmful to national economies, especially to the poorer segments of society? Had the international community failed to provide adequate financing to facilitate adjustment to problems that were international in origin? Was the International Monetary Fund, the main international agency responsible for external financing for stabilization programs, too narrowly focused in its program requirements? Had private banks extended excessive international credit, facilitating lax policies in some countries and necessitating a "bail-out" by public lending?

Fundamental questions have also been raised concerning the theory of economic stabilization. Do the traditional remedies of fiscal and monetary restraint and devaluation take account of the special circumstances of developing countries? Can these or other measures be carried out in ways that avoid prolonged loss of output, and undue concentration of hardship on the poor? Are gradualist programs more effective than shock treatment? How are the purely technical answers changed by considering the limits of tolerance of the political system?

In 1979 the Office of External Research of the U.S. Department of State commissioned the Brookings Institution to organize a conference of experts to analyze the foregoing questions and policy issues. The papers and . . .

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.