Reflecting the considerable current interest in the health of Australia's multinational corporations, "Australia's Foreign Debt: Myths and Realities" offers an authoritative view of the economic context. Professor John Pitchford challenges the notion that a large foreign debt is necessarily bad. Australian governments have an impeccable record on debt service, so if Australia has a debt problem it is not a public debt problem - it is not at all like the debt problems of the Third World. He points out that the greater part of Australia's net external debt is owed by the private sector. By definition then, it must have financed increases in the productive capacity of the private firms, the output from which can confer considerable benefits on Australians as well as paying the interest and dividends due to foreign lenders. Conventional wisdom has been that Australia's major economic problem is the build-up in foreign debt arising from large current-account deficits; it has even been suggested that this debt represents an obligation which one day will have to be met by each man, women and child in Australia.
Government attempts to reduce current-account deficits have included monetary measures to bring about high interest rates and slow economic growth, and campaigns urging the public to "buy Australian". Yet current-account deficits remain high and foreign debt continues to rise. Professor Pitchford's views have attracted wide media attention and have begun to make an impact on official thinking. This book brings together the economic definitions and arguments necessary to analyze these issues, helping the reader to understand the reasons why a rise in private external debt must increase productive capacity and lead to increased wealth. John Pitchford has been Professor of Economics at the Australian National University since 1965. His main fields of interest are international-, inflation- and population economics. This book is intended for students and researchers in economics.