ABSTRACT
Over the past two decades, Mexico has served as a bellwether for changes in the international financial environment facing developing countries. In the 1974– 81 prelude to the 1980s international debt crisis, Mexico led the way in the accumulation of external bank debt, and was the largest developing country debtor when the crisis struck. The crisis itself was bracketed by events in Mexico – it was triggered by Mexico’s announcement of its inability to service external debt in August of 1982, and the beginning of its end, at least for the major debtors, was marked by the agreement of a Brady Deal between Mexico and its external bank creditors in 1989. Not coincidentally, that date also marked the beginning of a new international financial regime for developing countries, one in which portfolio capital and foreign direct investment began to flow abundantly to the private sectors of a significant number of countries that had previously undertaken serious programs of stabilization and market-oriented structural reform. Once again, Mexico was in the vanguard, accounting by itself for 30 percent of total portfolio flows to developing countries over the period from 1989 to mid-1993.
