| Abstract: | This paper is an investigation of the role of international credit as a factor influencing the donor Countries' exports. Based on standard techniques of microeconomic theory, our model examines this relationship under different market structures in the industrialized donor country (North). Under monopoly and perfect competition, the availability of credit increases the North's exports; under oligopoly, within a class of parametric configurations, this relationship is reversed. We also find that, under certain conditions, if a developing country (South) takes recourse to international credit to finance its imports, it would end up worse off, that is the availability of international credit can be welfare-decreasing for the borrowing nation. |
