Optimal Borrowing Policies for Developing Countries: The Cases of Korea, the Philippines, and Thailand

International Monetary Fund

No 1987/041, IMF Working Papers from International Monetary Fund

Abstract: This paper develops a theoretical framework for analyzing external debt policies of developing countries and applies it to assess the cases of three Asian countries, namely Korea, the Philippines, and Thailand. The “optimal debt policy” for a developing country is characterized in the first part of the paper. In the second, the experiences of these three countries during the period 1965–83 are compared with this theoretical benchmark. The empirical results show that, during this period, Korea was quite successful in managing its external debt, while the Philippines was less successful. The case of Thailand, in many respects, fell in between the other two, although closer to that of Korea.

Keywords: WP; current account; debt service; exchange rate; GNP ratio; debt accumulation; GNP growth; accumulation of Korea; rate of return; debt policy; debt problem; debt situation; tax ratio of Korea; debt indicator; debt literature; short-run debt sustainability; Current account deficits; Exports; Consumption; Capital productivity; East Asia (search for similar items in EconPapers)
Pages: 44
Date: 1987-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1987/041

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