Abstract

This paper examines the similarities and contrasts of strategies adopted by the
larger South American economies — Argentina, Brazil and Chile — in dealing with the
problems raised by the fall of their export revenues coupled with the almost complete interruption
of the inflow of foreign capital in the late 1920s and early 1930s. The characteristics
of foreign indebtedness of these countries in the late 1920s and the ways the external shock
affected their balance of payments from 1928-29 to 1933-34 are also considered. Their
differentiated adjustment processes including debt adjustment schemes adopted during the
1930s and early 1940s are compared. Permanent debt settlements are described and discussed.
Finally, it considers the links between growth performance of these countries and
differentiated foreign debt policies.

JEL Classification: F34; N16.