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Up to half of those in the growing urban conglomerations will either remain unemployed, or seek informal employment in the huge informal sectors that have developed (Skidmore & Smith 2001, p413). In general terms, however, population growth will being to slow, and a large workforce will be available to Latin American countries in the next two decades. Depending on wider economic conditions, this short term problem may become a long-term asset, if accompanied by education and skills-development.

3) The problem of external debt and debt servicing still remains a major problem for many of the Latin American crises. Although the great debt crisis of the 1980s has been partly managed through 'debt renegotiation, export growth, and return of capital inflow', one in every three dollars generated by Latin American exports still goes back to merely service earlier loans (Skidmore & Smith 2001, p413). Thus, in 1996 total Latin American and Caribbean foreign debt stood at $622 billion, more than that of 1987 (Klak 1999, p109). The problem remained critical if marginally manageable: -

By the 1990s, when the flow of capital to the region had significantly changed in composition (equity rather than debt), the IFIs [International Financial Institutions] trumpeted the end of the debt crisis, notwithstanding the fact that the majority of countries still had to service their external debts at a level (50 percent of export earnings) that the world bank defined as "critical." However . . . the problem of the external debt, although now regarded as "manageable," is by no means over. By 1998, the total external debt held in Latin America climbed to 698 billion dollars, an increase on . . . the debt outstanding in 1987, the peak year of the debt crisis. What is significant about this debt is not so much its size (about 45 percent of the regional GNP), but the sheer volume of interest payments made to U.S. banks and the huge drain of potential capital. In just one year (1995) the banks received 67.5 billion dollars in income from this source and, over the course of the decade, well over six hundred billion dollars - a figure equivalent: to around 30 percent of total export earnings generated over the period. (Petras 1999, square brackets added)

In this context, even well-intended efforts by agencies such as the IMF need to be carefully monitored for the level of debt they project into the future for countries such as Argentina. Fortunately, international institutions and foreign banks also realise the great dangers of a general debt default in Latin America as whole. The IMF in particular, has tried to improve its responsiveness to the social dimensions of financial crisis, though debts are still carried forward into the future (see below).

4) The vision of immediate solutions through violent change has faded throughout much of the region. The optimism of Cuba's revolution, though having some social and educational successes within Cuba (see lecture 4), has not been found be a viable model for economic development for most of Latin America. Radical guerrilla forces remain strong only in Colombia, while more moderate forms of social rebellion found in Mexico and Brazil aim at providing benefits to landless and indigenous people. The turn away from revolutionary socialist solutions, partly based on external pressures, has been noted: -

Lecture 12

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