ABSTRACT
The view on Third World debt, especially Latin American debt, changed from one of alarm in 1984 to cautious optimism in 1985. Journalists, social scientists, and financiers in 1984 typically described such debt as a “ticking bomb” and the “Vietnam of the international financial system.” The debt crisis has deep historical roots. At its inception, the young republic agreed to recognize and assume the private debts of Bolivian citizens to Spain. In the nineteenth century, the state again borrowed from international markets on disadvantageous terms to meet annual deficits and to build railroads; it also made mining concessions and lost or ceded territories to neighboring countries. The emerging characteristics of industrial development in Bolivia can be regarded as the outcome of both long-term and short-term adaptations to the vagaries of external domination. The poorest artisans were often the most severely affected by the crisis. Hardest hit were the large number of knitters who knit sweaters by hand for export.
