ABSTRACT
The original causes of their growing foreign indebtedness differ for the three major Latin American countries, Argentina, Brazil, and Mexico. For a significant length of time, Argentina maintained an overvalued exchange rate that was an inducement to capital flight, and made substantial purchases abroad of military hardware. In dealing with the foreign-debt problem and the stage of development that identifies a newly industrialized country, it is pertinent to remember two basic concepts. Although in absolute terms the amount of Brazil's foreign debt is the highest among Latin American debtor countries, in relation to gross domestic product and population its ranking is quite different. The leap, implicit in the prevailing repayment scheme, would not be achieved without a blockade in economic growth because of the sharp upward shift in interest rates that took place at the beginning of the 1980s.
