ABSTRACT
This chapter discusses the effects of the borrowing boom and debt bust on the internal composition of business. Three related trends emerge. First, debt-led growth contributed to the creation of “wealthy businessmen and bankrupt businesses.” Second, in combination with government policy, the foreign borrowing of the 1970s and early 1980s led to a boom for domestic financiers all over Latin America. Finally, through its impact on domestic financial systems, debt-led growth contributed to industrial concentration. The chapter deals with the political repercussions of the economic trends. It describes how Argentine and Brazilian industrialists, disgruntled with government management of the borrowing binge and crisis, began to criticize authoritarianism and support calls for political opening. Among Latin American countries, there are several important cross-national differences in terms of the impact of foreign borrowing on capitalist development. The trade openings and the relaxation of capital controls in many Latin American countries provided opportunities for capital flight and purchase of luxury consumer imports.
