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. In Mozambique there is good governance which is trying to end poverty and bring sustained development. Being one of the poorest countries should its debt be relieved?

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As a result it can be seen that Debt cancellation should be part of a campaign to create the preconditions and good governance needed for economic growth. Similarly a stable framework for lasting self determined growth and take-off is essential for an ldc to move away from dependency. It also allows MDCs to demand reforms to end rural isolation and also to help the modern sector grow in town as well as country to replace the informal economy.

It can be seen that debt cancellation is a very effective method of setting tough conditions to ensure ...

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