The Latin America Debt Crisis - 1002 Words

The Latin America debt crisis What Happened Both internal and external for Latin Americas roller coaster economic performance in what was known as the crisis. During the 50’s and 60’s there was favorable conditions in place to maintain steady employment creation, capital investment and overall economic expansion. But this period ended in 1973 amid the first world oil crisis rocked the world economy and caused an era of debt-led growth among the oil importing Latin America countries. Latin American countries were hit by a slow down in economic growth. The import bill in these nations sky-rocketed and exports saw a massive slump as demand for Latin American products fell abruptly as the world economy slowed down. When a second oil price†¦show more content†¦The governments limited their costs by slashing social spending; education, health, social services, etc.., devaluing the national currency via lowering export earnings and increasing import costs, creating strict limits on food subsidies, cutting worke rs jobs and wages, taking over small subsistence farms for large-scale export crop farming and promoting the privatization of public industries. Most countries suffered a recession and often depression; and the poorest of the poor were most affected. As Latin America’s economies stagnated, per capita income plummeted, poverty increased, and the already wide gap between the rich and the poor widened further. The debt crisis seriously eroded whatever gains had been made in reducing poverty through improved social welfare measures over the booms of the 60’s and early 70’s. Poverty grew 50 percent; malnutrition 40 percent; children were increasingly recruited into the drug trade and prostitution; long-term unemployment and its adverse social effects increased; the weakening of local communities and the growth of crime and an epidemic of homicides, are but a few of the many dilemmas that the debt crisis caused. In August 1982 Mexico announced to the international financial community that it did not have enough external liquidity to fulfill its financial obligations and requested a 90 day rollover of the payments of the principal to prepare toward definite restructuringShow MoreRelatedThe Latin American Debt Crisis1584 Words   |  7 Pages The Latin American Debt crisis did not occur over night, the crisis was many years in the making and signs of its arrival were prominent in Latin American society. The reasons for its occurrence are also expansive; some fault can also be place in countries outside of Latin America. 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