In the summer of 1982 the international financial system was shaken by the economic crisis of several deeply indebted Latin American countries whose lack of liquidity and apparent inability to meet their financial obligations compelled the world bankers and international financial institutions thoroughly to re-examine their lending policies. Two years later the implications of the debt crisis have spilt over to the political arena and have involved the leaders of the industrial countries in seeking a solution to what seems to be a long-term problem.

This book derives from the papers presented at a recent study group on Latin America which was held by the Royal Institute of International Affairs at Chatham House. It deals with the development strategies and economic policies of several Latin American countries in the context of the international economic situation. The main questions the essays seek to answer are: what were the causes of the crisis; was it due to the debtor countries' wrong economic policies and overall mismanagement or was it a natural consequence of the world recession and the lending institutions' lack of sound economic forecasting; how can the crisis be overcome?

The introduction places the economic problem in a political context, exploring the relationship between economics and politics in Latin America; it draws parallels and points out contrasts between the different political regimes and the way the political outlook of the governments in power has affected their economic performances.