• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

third world debt

Extracts from this document...

Introduction

THIRD WORLD DEBT Cancelling all 3rd world debt seems morally right, but there are good economic reasons to be cautious. Debt cancellation should help create sustained economic growth and human development. However, this may not be the case if the money goes into the hands of the rich elite or corrupt dictators. Therefore it makes sense to use debt cancellation as a lever to get changes that are essential for economic growth and the emergence of good governance. For example, every child must get an education until 12 Debt cancellation should be given when it reduces poverty or brings sustained human development but not if it reinforces dualism and puts money in the hands of a corrupt or self serving elite. This is a result of the corrupt individuals wasting money on arms races or dictators using it to suppress people. This is the case in Zimbabwe where there is widespread violence and instability so debt shouldn't be cancelled. However, bordering Zimbabwe is Mozambique. ...read more.

Middle

Our debt cancellation judgment must look at each country individually and ask whether debt cancellation can reduce poverty. This should be far more important than the self interest of a country and banks. Similarly governments declare aid and debt cancellation but fail to carry out promises made. The conditions set must be sensitive to the obstacles and potential of each country. Therefore fixed conditions or free market ideology should not be imposed. In contrast negotiations should take place with local officials and economists as they know what's best for a country. In order to make the best use out of debt cancellation it may be best to gradually relieve debt in a number of instalments. However, there is an extreme position when immediate relief is essential. This occurs when debt servicing is unsustainable and repayments of capital with interest are greater than a country's annual exports. At this it seems morally incorrect for mdcs to demand there money back. Another major issue surrounding 3rd world debt is the demand for foreign currency. ...read more.

Conclusion

In comparison Incompetent government borrowed and wasted money as institutions didn't exist to utilise the spending. Similarly why should banks suffer because of these misjudgements in LDCs. There is a high opportunity cost of cancelling 3rd world debt including education spending and pension funds. If we cancel the debt of Pakistan because they have improved their institutions and have worked towards improving human development it can create a dilemma. India will argue that they have worked hard in paying off debt and deserve debt cancellation. Debt cancellation is too often a tax on poor people in rich countries that ends up as benefit to the rich in poor countries Encourages people to muck about and waste money then go back and ask for more. Should this misallocation of money be payed for by the west instead of spending on healthcare and education? Overall it can be concluded that third world debt is extremely damaging to an ldc and should be cancelled. However, debt cancellation should be a process where demands associated with economic growth and human development are met. The process should include debt cancellation in instalments and not in one go. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Why has GDP growth been so slow in Somalia?

    When Somalia was in Italian control more than $40 million was spent to build a brand new hospital equipped with sophisticated machinery and operating rooms, in the south of Mogadishu76. Since the Somalis were unable to run it, the hospital was left derelict, falling to pieces.

  2. Where does the World Trade Organisation fit in the overall scheme of international public ...

    co-operation and capacity building References to technical co-operation and capacity building are also spattered throughout the Ministerial Declaration, as well as occupying a four-paragraph separate section in it. The wording is mostly vague and exhortatory, even though there is reference to "firm commitments" in the Declaration.

  1. Will trading fairly reduce world poverty?

    The historical events of colonisation are one that stretches around the globe and across time. From the sixteenth century and onwards, the leaders of the western countries of Europe believed it was their right to try to conquer and rule the other parts of the world and form empires.

  2. A Comparison Of The Path Of Development In

    In response, these efforts did result in approximately 15000 people in Quebec but unfortunately, the fur trade was still seen as a more desirable activity then agriculture. Agricultural activity was not pursed for profit, nor was it pursued to an extent that would result in surplus and consequent export; rather,

  1. Explain the evolution and characteristics of the debt problems of LDCs. In the light ...

    A country that owes much of its debt to such agencies is more likely to have to alter domestic policy in favour of foreign interests, even if these changes do not reflect the needs of the country. Thus, there is a tendency that the poorer the country, the more likely

  2. This investigation will try to test the level of external debt and measure its ...

    of the burden of external debt, from the period of 1990 to April 2004. In the following Chapter, there will be a global analysis from the period 1990 to 2004, which involve the stock of the external debt, the structure by creditor as well as the structure by debtor, and

  1. Case Study: Mozambique Floods of 2000.

    More than 900 state enterprises have been privatised. Pending are tax and much needed commercial code reform, as well as greater private sector involvement in the transportation, telecommunications, and energy sectors. Since 1996, inflation has been low and foreign exchange rates stable.

  2. Unsustainable Debt.

    The origins of the debt crisis lie in the beginning of the Cold War era. An era in which the two superpowers of the world sought to gain alliances with as many nations as possible. One such method of attracting allegiance was to provide military aid and economic aid (termed

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work