Noreena Hertz, one of the world’s leading experts on economic globalization, looks at the history of third-world debt and its crippling effects on people in developing countries.

Drawing from her impressive debt-relief campaign, fact-finding travels, and meetings with top-ranking officials, Hertz offers a probing analysis of the origins of this rampant burden and its evolution through the decades. With clear principles of justice, she uncovers the imbalance of power and misuse of corrupt dictators and reckless lenders.

Developing country debt crises have been a recurrent phenomenon over the past two centuries. In recent times sovereign debt insolvency crises in developing and emerging economies peaked in the 1980s and, again, from the middle 1990s to the start of the new millennium. Despite the fact that several developing countries now have stronger economic fundamentals than they did in the 1990s, sovereign debt crises will reoccur again. The reasons for this are numerous, but the central one is that economic fluctuations are inherent features of financial markets, the boom and bust nature of which intensify under liberalized financial environments that developing countries have increasingly adopted since the 1970s. Indeed, today we are in the midst of an almost unprecedented global ‘bust’ The timing of the book is important. The conventional wisdom is that the international economic and financial system is broken. Policymakers in both the poorest and the richest countries are likely to seriously consider how to restructure the international trade and financial system, including how to resolve sovereign debt crises in a more effective and fair manner. This book calls for the international reform of sovereign debt workouts which derives from both economic theory and real-world experiences. Country case studies underline the point that we need to do better. This book recognizes that the politics of the international treatment of sovereign debt have not supported systemic reform efforts thus far; however, failure in the past does not preclude success in the future in an evolving international political environment, and the book thus puts forth alternative reform ideas for consideration.

Small island developing states (SIDS) are widely acknowledged to be among the most economically vulnerable in the world. As small open economies, SIDS are especially exposed to external shocks. The environmental, economic, and social difficulties stemming from climate change, rising sea levels, and natural disasters exacerbate the significant risks to the sustainable development of SIDS. In spite of the critical impact of high and rising debt levels on the developmental fortunes of these nations, very little comprehensive and rigorous academic research has been conducted on the nexus between debt and development in these vulnerable economies.

Debt and Development in Small Island Developing States draws on the expertise of established researchers and public officials from the SIDS community to answer the following questions: What has been the nature and extent of the debt experience in SIDS? What are the drivers of debt accumulation in such countries? What are the characteristics of SIDS that explain their propensity to indebtedness? And what are the prospects for debt sustainability in such countries over the medium term? This edited volume contributes to the literature by highlighting the essential elements of an agenda for achieving debt sustainability in SIDS.