Capital Flows, Foreign Direct Investment, and Debt-Equity Swaps in Developing Countries
One of the nest serious consequences of the debt crisis of 1982 has been the reduction in the accessibility to the world capital market for most developing countries. This situation has proved to be particularly serious for Latin American nations. At this juncture, a key question is how to improve the LLCs attractiveness for foreign capital flows. In this paper I explore the role of two potential sour of additional private capital inflows: increased direct foreign investment, and the debt-conversion mechanisms. The paper presents the results from an economic analysis of the determinants of the cross-country distribution of the OECD direct foreign investment (DFI) into the LDCs. Particular emphasis is given to assessing the relative importance of political variables of the recipient countries. The role of the debt-equity swaps as investments for reducing the extreme debt burden is also investigated, using the recent Chilean experience with these mechanisms as a case-study.
|Date of creation:||Oct 1990|
|Publication status:||published as Capital Flows in the World Economy, edited by Horst Siebert, pp. 255-281. Tubingen: J.C.B. Mohr, 1991.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- Rudiger Dornbusch & Thomas S. Johnson & Anne O. Krueger, 1988.
"Our LDC Debts,"
NBER Chapters,in: The United States in the World Economy, pages 161-214
National Bureau of Economic Research, Inc.
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- Cukierman, Alex & Edwards, Sebastian & Tabellini, Guido, 1992. "Seigniorage and Political Instability," American Economic Review, American Economic Association, vol. 82(3), pages 537-555, June.
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