Debt-Equity Swaps and Foreign Direct Investment in Latin America

摘要

In the face of continuing debt problems and a decline in foreign direct investment (FDI), the governments of several developing countries have initiated a variety of programs to redeem their foreign debt before it is due, giving creditors different kinds of assets in exchange. In one such program, known as 'debt-equity swaps,' debtor countries permit private investors to redeem public foreign debt for equity shares in new or existing companies. The paper describes the results of empirical research on the effects of debt-equity swaps in attracting FDI. The research was designed primarily to be useful to governments of debtor countries, in deciding whether or not to have a swap program and, if so, how to fashion it. The paper is not a guide for investors who might want to use swaps. Moreover, the paper is written for readers who are already familiar with the basic facts and concepts of debt-equity swaps; standard information that has been described many times in conferences, papers and articles has not been repeated here. (Copyright (c) 1988 The World Bank and International Finance Corporation.)