| Abstract: |
The past seven years have seen little improvement in the worlddebt situation. During this period, policymakers have shiftedtheir attention from demand reduction by debtor nations to supplyexpansion. Most recently, debt reduction has become the principalissue. This article reviews various ways of resolving the debt problem.There is widespread agreement among competing proposals thatan efficient solution requires both debt reduction and economicgrowth in debtor countries. Disagreement arises over whetherthe necessary debt reduction and consequent adjustment in policiesin developing countries can be generated by market forces alone.The alternative is usually thought to be intervention by governmentsand commitment of public funds. This article groups and analyzesproposed solutions according to their relation to these twopositions. The survey concludes that there is no clear-cut solution tothe problem. Methods vary widely in their implications for efficiencyand equity as well as in their capacity to improve the situationand to do so quickly. Inevitably, official policy will continueto be determined less by economic ideals than by exigencies.The more urgent the problem becomes, the more likely the balanceis to swing from reliance on the market to direct intervention. |
