 | | | | The effect of external debt on investment.: An article from: Finance & Development |  | Author: Eduardo. Borensztein
Brand: The Gale Group
Category: Book
Buy New: $5.95
Format: Html
Language: English (Published)
Media: Digital
Pages: 7
ASIN: B0008SDEV6
Publication Date: September 1, 1989
Release Date: July 28, 2005
Availability: Available for download now
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Product Description
This digital document is an article from Finance & Development, published by International Monetary Fund on September 1, 1989. The length of the article is 2074 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.
From the supplier: The debt crisis has been accompanied by a decrease in the investment rates of highly indebted countries (HICs), reducing the capacity of HICs to service debt and discouraging foreign and domestic direct investments. Foreign debt affects investment in two ways: debt overhang and credit rationing. Linking debt repayment to economic performance leads to the absorption of gains by increased debt payments, with the consequences of: decreasing consumption; weakening the incentive to invest; and discouraging structural adjustments. An inability to obtain new foreign loans causes an increase in domestic interest rates to achieve equilibrium between investment and savings, negatively impacting on the capacity to invest. Additional lending results in an increase in productive investment. Debt reduction must be combined with new loans in order to maximize the stimulation of productive investment.
Citation Details
Title: The effect of external debt on investment.
Author: Eduardo. Borensztein
Publication: Finance & Development (Magazine/Journal)
Date: September 1, 1989
Publisher: International Monetary Fund
Volume: v26 Issue: n3 Page: p17(3)
Distributed by Thomson Gale
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