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Trade and Development Report 1991

image of Trade and Development Report 1991

Overall, the trade volume performance of developing countries in 1990 was mixed. There was a considerable deceleration in the growth of exports from South and South-East Asia for the second consecutive year, mainly owing to a sharp slowdown in the exports of the four more in- dustrialized economies of the region. Also for the second consecutive year, Latin America re- corded negligible export growth, particularly for non-energy products. However, results were highly varied among countries: those suffering from continued macroeconomic instability fared far worse than the remainder. In Africa, the volume of exports registered an unusual spurt in 1990, but much of it was due to higher oil exports by the region's few energy-exporting countries. Moreover, in commodity markets increases in export volumes are often associated with softness of prices. In China, after a setback in 1989 exports recovered the momentum characteristic of the 1980s, while imports fell substantially in response to restrictive macroeconomic policies.

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Financial fragility and global expansion

The organization of international financial markets has undergone major changes in the last three decades, with important consequences, direct or indirect, for developing countries. For instance, in the 1960s many United States banks established themselves offshore, where regulations were minimal, and were consequently able to take the lead in the "petrodollar recycling" of the 1970s. This process, together with the switch from officially-set to market-determined (i.e. floating) exchange rates, eroded the role of the official sector in international finance. The growth of commercial bank exposure to developing countries was made possible by the extensive use of rollover credits at variable interest rates. But this also made a crisis for both creditors and debtors inescapable when, at the end of the decade, dollar interest rates escalated and the world economy entered a deep recession.

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