We examine the effect of perturbative string loops on the cosmological pre-
big-bang evolution. We study loop corrections derived from heterotic string
theory compactified on a ZN orbifold and we consider the effect of the all
-order loop corrections to the Kahler potential and of the corrections to g
ravitational couplings, including both threshold corrections and correction
s due to the mixed Kahler-gravitational anomaly. We find that string loops
can drive the evolution into the region of the parameter space where a grac
eful exit is in principle possible, and we find solutions that, in the stri
ng frame, connect smoothly the superinflationary pre-big-bang evolution to
a phase where the curvature and the derivative of the dilaton are decreasin
g. We also find that at a critical coupling the loop corrections to the Kah
ler potential induce a ghost-like instability, i.e. the kinetic term of the
dilaton vanishes. This is similar to what happens in Seiberg-Witten theory
and signals the transition to a new regime where the light modes in the ef
fective action are different and are related to the original ones by S-dual
ity. In a string context, this means that we enter a D-brane dominated phas
e. (C) 1999 Elsevier Science B.V. All rights reserved.