Finance and Competitiveness in Developing Countries by José María Fanelli, Rohinton Medhora

By José María Fanelli, Rohinton Medhora

This quantity represents a uniquely thorough research of alternate and monetary coverage because it affects upon 3rd international improvement. A large diversity of foreign case reviews (including Indonesia, Uruguay and Tunisia) supply a wealth of empirical fabric and statistical info. Thematic dialogue chapters construct on those case reviews, supplying very important research of subject matters comparable to exchange specialization and commercial switch.

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Source: Elaborated on the basis of Sistema de Informacion Bursatil data. the evolution of real long-term liabilities of losers and winners within the manufacturing industry. While the real value of long-run liabilities in the case of winners shows a pronounced upward trend reaching a 1997 value which is eight times its 1986 level, that of the losers fluctuates around a mean of zero growth. Hence, the low (and even negative in some firms) investment demand of losers may be correlated with difficulties in obtaining long-term finance.

A priori, these firms should suffer from the effects of market imperfections less than manufacturing firms. The pattern in the relationship between assets, liabilities and net worth reproduces the one corresponding to winners in the 1990s. There is a fact, nonetheless, that sharply differentiates this group from both the winners and losers: the effects of the Tequila crisis are hardly discernible in the graph. It is clear that these larger firms with a low standard deviation in cash flow have much more stable access to financial markets and are, thus, better equipped to resist macroeconomic shocks.

The economy was nevertheless growing rapidly (7 per cent per year on average), thanks to large capital inflows. Period 2 40 of 280 10/15/07 3:52 PM Finance and Competitiveness in Developing Countries file:///Users/jjg/Desktop/Finance%20and%20Competitiveness%20i... From 1982 to 1990 the economy experienced the effects touched off by the Mexican moratorium declared in 1982. Even stronger trade barriers were imposed, and capital flows were very timid. The current account suffered a drastic reduction, from a 6 per cent deficit in 1982 to zero balance in 1984.

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