The paper develops a structuralist North-South model in which growth in the South is constrained by a technology-gap, leading to reduced competitiveness and Balance-of-Payments disequilibrium. The South demands foreign capital in order to achieve full employment and convergence with respect to the Northern rates of growth. But the rate of growth of foreign capital inflows falls as the Southern debt increases. This leads to a brief period of convergence, followed by slower growth in the South.
