Development Finance in the 1990s for Latin American Resource Exporting Countries

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As a result of the debt crisis, per capita income in Latin America in 1990 was 10% below its 1981 level. Many resource exporting countries in the region have undertaken wide and deep reforms in order, among other reasons, to attract and retain long‐term capital to fuel growth prospects. One newly proposed long‐term instrument for development finance and risk management is the commodity bond. Given the sovereign risk component, the costly premiums that must be paid to insure it and more efficient alternative instruments for both issuers and investors, commodity bonds are unlikely to generate the required long‐term capital needed to enhance growth prospects. With the continuing globalization of the goods, factors and currency markets, long‐term capital can be attracted and maintained in both developed and developing countries by an attractive investment environment characterized by a competitive microeconomy, a stable macroeconomy, strong global linkages, and a serious programme to improve physical and social infrastructure. 1994 United Nations



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