chapter  9
22 Pages

Conclusions and Some Policy Proposals

Thefutureprospectsforinternationalfmancingofdevelopingcountriesarenotveryencouragingifcurrenteconomicandfinancialtrends followthoseprevalentintheearlyeighties.Ifeconomicrecoveryin theindustrialcountriesisminimalanddelayedasmanyobserversstill fear,thenthecurrentaccountdeficitsofdevelopingcountriesmay continuetoriserapidly,thusleadingtoheavydemandsuponinternationalfmanc~tocoverthisgap.Thus,estimatesproducedbyMorgan Guaranty(WorldFinancialMarkets,February1984)suggestthateven ifthe21majordevelopingcountrybo"owersmakeamajorandsustained'adjustment'effort(whichassumesGrossDomesticProduct (GDP)growthin1983lowerthanthepopulationgrowth-butimplying5.0percentGDPgrowthin1983and1985)aslongasindustrial countries'economicgrowthisverylow,thecurrentaccountdeficits ofdevelopingcountrieswillcontinuetogrowataveryhighpace. MorganGuarantyestimatesthatinthispessimistic'scenario'the currentaccountdeficitsofthe21majorLDCborrowersalonewould increasefromanestimatedUS$64billionin1982toUS$102billionin 1985.Naturally,asaresultdebtwouldincreasedramatically.