Debt, growth and development: Prospects for the future

The Trade and Development Report 1985 drew attention to the weaknesses of the recovery process in industrialized countries and of the strategy being pursued with respect to the debt problems of developing countries. It saw the need for a co-ordinated shift of monetary and fiscal policies in the major developed market economies to bring about a more even pace of demand and output growth, and a depreciation of the dollar. Pointing out that adjustment by debtor countries had depressed investment, it emphasized that, unless growth revived in these countries, their capacity to service debt would fail to expand sufficiently; indeed, it might suffer further erosion. The intimate connection between recovery, on the one hand, and debt and development on the other, was also underlined. The 1985 Report further pointed out that policy reorientation was needed in the major OECD economies to bring about not only more balanced growth in the OECD area, but also a faster overall rate of growth and substantially lower interest rates, since, unless the latter objectives were met, the external trading and financial environment of developing countries would remain hostile, obstructing the revival of investment needed for development and debt servicing. At the same time, unless the debt prospects of developing countries improved, the international financial system, and hence recovery in OECD countries, would remain at risk.

Sustainable Development Goals:

Decent Work and Economic Growth

Partnerships for the Goals