The developing countries’ foreign debt in the last twenty years

In the last years of the 20th century numerous organizations proposed debt forgiveness policy as a radical solution to the foreign debt crises in the developing countries. Today, economists are seriously engaged in analysis of the impact of debt forgiveness on the economic growth of the poor countries. This paper examines the foreign debt problem and describes economic growth models in order to explain how debt forgiveness helps badly indebted poor economies to achieve higher economic growth rates.