ABSTRACT
This chapter aims to put in perspective the origins of the present difficulties and their implications with regard to future financing for less developed countries (LDCs), and possible solutions. The number of developing countries with access to the international capital markets was limited and the amounts they received did not represent a substantial proportion of the markets concerned. The rapid expansion of international lending to LDCs can be associated with the growth of the Eurodollar markets in the 1970s. As late as 1970-1972, external financing to the developing countries was still largely provided through non-debt-creating flows from official sources and long-term capital investment from private sources. A large part of the resources for this expansion was provided by short-term bank deposits of the governments of oil-exporting countries, and the largest part of the markets' assets were private bank credits to the governments and official entities of deficit countries.
