ABSTRACT
This chapter focuses on the two key forms of debt flows: bank loans and bonds. It deals with debt-creating capital flows to developing countries, the world of lending and borrowing, of credit and debt. The data provided by the World Banks Debtor Reporting System (DRS) distinguishes net short-term debt flows from medium- and long-term debt flows. External debt stocks as opposed to flows show the accumulated value of outstanding borrowing. In recent years there has been a transformation from debt financing to equity financing, especially to foreign direct investment (FDI). The chapter focuses on consequences and responses to the Third World debt crisis, as well as a series of ongoing issues such as the threat from vulture funds. The International Bank for Reconstruction and Development (IBRD) structured like a cooperative is owned and operated for the benefit of the member countries is one of five institutions that make up the World Bank Group.
