Public debt in developing countries has often led to economic vulnerability rather than growth in the past 25 years. This is true even for countries with good economic policies. The study shows that market-based models of external finance have not been very successful in promoting growth in these countries. Some countries have tried to address debt issues by increasing fiscal surpluses and reforming financial institutions, but the effectiveness of this approach is still uncertain. International financial institutions may need to provide more stable long-term development finance to these countries to support their growth.