ABSTRACT
This chapter analyzes a number of issues related to structural adjustment in the highly indebted developing countries, with special emphasis on Latin America. Devaluations have also played a key role in the trade reform component of structural adjustment programs. During the second half of the 1970s and in the early 1980s a large number of Latin American countries, as well as other developing nations, became indebted at extremely high interest rates. Between 1975 and 1982 the Latin American long-term foreign debt more than tripled. In Brazil, for example, the growth in foreign debt responded to a deliberate development strategy adopted after the 1973 oil shock. Among the internal factors the adoption of inadequate exchange-rate policies constitutes one of the most important causes of the crisis; most of the countries that eventually experienced payments difficulties allowed their real exchange rates to become highly overvalued during the late 1970s and early 1980s.
