Foreign Debt Policies in South America, 1929-1945

This paper examines the similarities and contrasts of strategies adopted by thelarger South American economies — Argentina, Brazil and Chile — in dealing with theproblems raised by the fall of their export revenues coupled with the almost complete interruptionof the inflow of foreign capital in the late 1920s and early 1930s. The characteristicsof foreign indebtedness of these countries in the late 1920s and the ways the external shockaffected their balance of payments from 1928-29 to 1933-34 are also considered. Theirdifferentiated adjustment processes including debt adjustment schemes adopted during the1930s and early 1940s are compared. Permanent debt settlements are described and discussed.Finally, it considers the links between growth performance of these countries anddifferentiated foreign debt policies. JEL Classification: F34; N16.