ABSTRACT
This chapter presents a framework for analyzing the political effects of the Latin American debt crisis, and suggests an alternative based on the broader political economy literature. It summarizes the domestic political impact of the debt crisis in the five largest Latin American debtor nations: Argentina, Brazil, Chile, Mexico, and Venezuela. The chapter highlights how the domestic distributional effects of the financial crisis have been reflected in the domestic political arenas of the major Latin American debtors. It discusses the distributional effects of international financial relations during the borrowing process and the financial crisis respectively, and explores the political implications of these distributional effects during the debt crisis. International financial relations have differential consequences, and their political implications follow from their distributional effects. Foreign debt is often a source of domestic political conflict, for it can raise important distributional issues. Government policy can affect the distribution of foreign finance and thus the costs and benefits of a country’s international financial position.
