Global Capital Markets and External Debt

Abstract

This chapter examines the sustainability and developmental consequences of foreign debt accumulation in the economies of the Commonwealth of Independent States (CIS). Drawing on a Post-Keynesian analytical framework, it argues that the region’s persistent financial fragility and uneven economic transition outcomes are closely linked to the design of early market reforms. Using comparative data for the 1995–2025 period, the chapter analyzes trends in external debt accumulation, composition, and servicing capacity, alongside indicators of balance-of-payments vulnerability and domestic financial development. The findings suggest that foreign borrowing in the CIS has often exacerbated structural weaknesses rather than support sustained growth, as debt inflows were frequently directed toward consumption and imports rather than productive investment and export diversification. The chapter concludes that the adverse effects of foreign debt stem, not from its presence per se, but from its composition, use, and interaction with constrained policy autonomy, externally imposed adjustment frameworks, and weak institutions, which together have hindered the transition process.