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Assess some of the ways in which Third World Debt might be reduced

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Introduction

Assess some of the ways in which Third World Debt might be reduced. Despite the overwhelming number of statistics and indicators, global poverty is as hard to measure as it is to conceptualize. One fact is undeniable: someone is going to have to pay for past debts. It could be the people in debtor countries, or the banks, or the people in advanced industrial countries. Most likely it will be some combination of these three groups. In the last ten years, there have been a variety of proposals which, unfortunately, usually reflect only the special interests of the groups proposing them. Generally speaking, these solutions fall into three categories: repudiation, minor adjustments in repayments, or reduction. A report "Relief Works: African proposals for debt cancellation - and why debt relief works" examines public spending in 10 African countries which have benefited from debt cancellation. It reveals that total spending on education in these countries has increased, and is now twice the amount that is being paid to foreign creditors. ...read more.

Middle

The escalation of economic warfare would have the effect of sharply reducing international economic interactions in trade, investment, and exchange. Such an outcome is in no one's interest. There is nothing to guarantee that the countries won't simply get into debt all over again and continue to owe more allegiance to first world elites than to their own people. Repudiation also let's off the hook the World Bank, IMF and commercial lenders who created these injudicious loans in the first place. Another option would be to cancel debt with conditions. Part of the cycle is that as countries get deeper in debt and grow more impoverished as they try to repay, the lenders impose a whole new range of what they say are anti-poverty and anti-corruption conditions, but which most often have other agendas, such as opening up poor countries to multi-national companies. Therefore a proactive proposal that meets several criteria needs to be developed in order for this method to be successful. ...read more.

Conclusion

This need not, and should not, be the case. The developed countries have a responsibility to create conditions whereby the poorer countries can interact more productively in international economic activities: their single most important contribution to this end might be in the area of reducing trade restrictions on the products of poorer countries. Similarly, the developing countries have a responsibility to see that money is more effectively utilized within their own borders. The obscene personal profits accumulated by such leaders as Marcos of the Philippines and Mobutu of Zaire should not be fostered by the strategic interests of other countries. The banks should also face up to the fact that their single-minded pursuit of profits almost led them to the brink of bankruptcy. The lesson to be learned from this experience is that for economic growth to be sustained, close attention must be paid to the mutual interests of all parties involved. Only after sustained economic growth returns to the heavily indebted countries can the international community even begin to determine manageable rates and methods of debt repayment. ...read more.

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