DEBTINTHE1990s/193Treasury Bonds to guarantee their own borrowing on international
markets. Simply put, the US authorities raise funds among their
Southern neighbours in order to finance the US public debt, while
these same Southern neighbours seek out capital on private financial
markets in the US and Europe in order to pay off their foreign and
domestic debts.
The fundamental problem here is that such policies do not lead to
a process of cumulative development by which these countries could
catch up with the industrialised powers of the North. Trade
imbalances have actually grown, whatever the optimistic pro
nouncements of Latin American leaders. This is due to the structure
of Latin American exports to the world market. Whatever the level of
industrialisation, these countries remain far behind the North.
According to Oscar Ugarteche, there has even been a 're-primarisa-
tion' of Latin American exports in recent years - in that
proportionally Latin America exports more low value-added
('primary') products than before (Ugarteche, 1996). At the same
time, industries targeting the domestic market have stagnated or
declined, whether they have remained in domestic hands or been
sold off to foreign interests. Foreign investors are rarely interested in
boosting both employment and production. There are exceptions: the
auto sector in Argentina, Brazil and Venezuela, and some
investments in the oil sector; but these are marginal. Multinationals,
with American MNCs in the lead, seek to bolster their control over
local economies, not to develop them.
NEW DEBT SPIRAL FOR LATIN AMERICA
Unlike Africa and South Asia, financial markets are once again very
interested in Latin America. They hold more than 65 per cent of the
continent's foreign debt. It is primarily by holding so much private
and public debt paper that financial markets have been able to
increase their control over Latin America's foreign debt. The total
value of Latin American debt paper increased twenty-fold between
1980 and 1996.
Since the beginning of the 1990s, Latin America has entered a
new cycle of debt. The new neo-liberal policy of opening up to foreign
capital has had real success. Holders of capital from the North are
indeed interested once again in investing some of their liquidity in
debt paper and on the stock market (portfolio investment). In