The Debt Crisis of the 1980s


The Debt Crisis of the 1980s

Law and Political Economy

9781839103629 Edward Elgar Publishing
Jérôme Sgard, Professor of Political Economy, Sciences Po, Paris, France
Publication Date: September 2023 ISBN: 978 1 83910 362 9 Extent: c 416 pp
This book offers a novel account of the debt crisis which hit many developing countries, between 1982 and 1989. Its strong interdisciplinary approach brings together the financial, political and legal dimensions. It will be of major interest for those interested in the economic history of post-WWII decades, sovereign debt in general and financial multilateralism.

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This book offers a novel account of the significant debt crisis which hit many developing countries during the 1980s. It starts with the flawed cycle of bank lending during the 1970s, and then moves from the opening act, in Mexico in 1982, until a solution was found with the 1989 Brady Initiative.

The Debt Crisis of the 1980s also articulates closely the economic and financial dimensions alongside the political and multilateral ones. The key relation between debtor countries and the IMF is explored in detail, but the book also documents the tense and often coercive interactions with commercial banks as well as on the continuing resistance to the IMF-led strategy among G7 governments. How debt contracts were restructured during all those years helps understanding how the Brady Initiative worked in practice, and how it prepared the ground for the turn to global markets after 1990. This debt crisis was indeed one of the main incubators of globalisation. This underlines further its unique character in the long-run history of sovereign debts, before and after the 1980s.

Remarkably, this book rests on in-depth interviews with the key players. Transcripts are included for the six most important players, including the former heads of the US Federal Reserve and the IMF. Archives from the IMF, the New York Federal Reserve, the Bank of England and commercial banks have also been systematically exploited, often for the first time ever.
This narrative and analytical account of one of the biggest debt crises in history is addressed to students and researchers in economics, international history, political economy and socio-legal studies. It will additionally be of value for professional economists and lawyers working on sovereign debts.
Critical Acclaim
‘After every major historical event there will be a period of time - a necessarily limited period of time - in which a chronicler will be far enough away from the event to permit a critical assessment of what happened but close enough in time that the principal actors in the drama remain available for oral interviews. For the global sovereign debt crisis of the 1980s, Professor Sgard has hit that temporal sweet spot perfectly. His meticulous historical research is enlightened by the personal recollections of many of the individuals who directed and endured those events.’
– Professor (Hon.) Lee C. Buchheit, University of Edinburgh Law School, UK

‘Jérôme Sgard’s book is both timely, well researched and enjoyable. It offers an insightful analysis of the first sovereign debt crisis of the post-WWII era, combining different original perspectives. Beyond the economic and financial dimensions, it covers accounting, prudential, legal and sociological angles, as well as highlighting leadership. It helps the reader meditate on the lessons to draw to better handle the current crisis.’
– Pierre Cailleteau, Banque Lazard, Paris, France
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