Debt Crisis of the Less Developed Countries and the Transfer Debate Once Again

Journal of Development Studies, Vol. 27, No. 4, July 1991

Posted: 2 Oct 2007

See all articles by Prabirjit Sarkar

Prabirjit Sarkar

University of Cambridge - Centre for Business Research (CBR)

Abstract

In the perspective of substantial amount of net transfers from the debtor less developed countries (LDCs) to the creditor developed countries (DCs) in the recent debt crisis years, there is a renewed debate (that started in the context of German reparation payments after the First World War) on the question of transfer burden of debt. The present study assembles some evidence to show that the LDCs in general expanded their export-volumes and faced losses in their export unit values in the process of their debt repayments. Many LDCs faced this transfer burden of debt irrespective of whether their export drive was in the field of primary products or manufactures. Thus the Keynesian analysis for German transfer problems seems to be relevant in the context of the present experience of the LDCs. For some debtor countries, the 'insoluble' transfer problem mentioned by Keynes exists as they are facing 'Fisher's paradox': The more the debtors pay, the more they owe.

Keywords: Debt crisis, less developed countries, transfer burden, Keynes-Ohlin debate

JEL Classification: N10, N20, O10, O19, O50, O54

Suggested Citation

Sarkar, Prabirjit, Debt Crisis of the Less Developed Countries and the Transfer Debate Once Again. Journal of Development Studies, Vol. 27, No. 4, July 1991, Available at SSRN: https://ssrn.com/abstract=1018576

Prabirjit Sarkar (Contact Author)

University of Cambridge - Centre for Business Research (CBR) ( email )

Cambridge
United Kingdom

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