The 1980s debt crisis, an incinerator of past policies & an incubator of the global turn? Interview with Jérôme Sgard

The Debt crisis of the 1980s CoverProfessor Jérôme Sgard is the author of The Debt Crisis of the 1980s: Law and Political Economy (Edward Elgar, December 2023), in which he offers a novel account of the major debt crisis that hit developing countries during the 1980s. The whole episode was sparked by a spectacularly flawed cycle of bank lending, during the 1970s. The open crisis started with the quasi-default of Mexico, in 1982, and was only resolved in 1989-92, with the so-called Brady Initiative.

Jérôme answers our questions about how governments and international institutions (the International Monetary Fund in particular) dealt with it at the time. We also discuss why this crisis has not been much studied, even though it also sheds a strong light on current issues of international financial governance.

In the introduction of your book, you note, as a reason for your inquiry, that very little has been written on the 1980s debt crisis since it was resolved, around 1989-1992, but, at the same time, that this crisis has a significant place in the long history of globalization and international finance. Can you expand on this?

Indeed, this crisis should have a prime place in economic and financial history! If you look back over the two last centuries, only the financial crisis of the 1930s was clearly larger than that of the 1980s: more countries stopped servicing their debt, more debt remained unpaid, and the resolution also took way more time in the former case (...)

 

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