Determinants of Third World Mineral-Oil Economies External Debt

Abstract

Third World mineral economies have experienced consider· able problems in recent years in servicing their external debt. The question asked in this paper is whether or not these economies are inherently more prone to defaults and reschedulings than developing countries in general, and if so for what reason. The main thesis of the paper is that developing countries have not been uniform in their accumulation of debt, and that in fact the mineral-oil economies have borrowed in internation· al markets for reasons quite different from those of other devel· oping countries. Furthermore, they have used their debt in ways distinctively different from non-mineral/oil countries. The analysis undertaken in the study tends to confirm these patterns. It appears that mineral-oil countries have not only higher levels of debt per level of gross domestic product than other developing countries, but have in many ways used this debt more productively. Thus it appears that the relatively large number of defaults experienced by this group of countries appears to be as much the fault of the international financial community as of the countries themselves.