Discussion: Thread: 7.1 The Impact of Debt & International Organizations on Nation State Underdevelopment (Due Feb. 24, 2020)

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Discussion Board: Q & A -(Due February 24, 2020)

Discussion: Thread: 7.1 The Impact of Debt & International Organizations on Nation State Underdevelopment

8.1 The Impact of Debt & International Organizations on Nation State Underdevelopment

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Q1: Sustainable development demands that states have significant financial resources available to them on a consistent basis. In developed countries these financial resources usually come from company profits and government taxes. In developing states that suffer from political instability and weak currencies, any profits that may be earned and any savings quickly fall victim to “capital flight” and are moved into more stable Western currencies and banks for safekeeping. As a result, developing states suffer from a chronic scarcity of investment funds to meet development needs internally. Therefore, developing states are left to borrow development funds, often accumulating large amounts of private and sovereign government debt.

Q2: As we learned in Chapter 8, there are a wide variety of international institutions (IOs) and bilateral country-to-country sources out there available to acquire these kinds of funds through loans or grants. But some of these sources carry with them strings attached and sometimes burdensome debt service payments.

q3: Based upon what you have learned in Chapter 8 and the Instructor notes, what is the likely impact on the developing state of accumulating large amounts of private and sovereign government debt? Does this help or hurt a developing economy? Do states have other alternatives?

Q4: And finally, what is the role, function and impact of IOs in filling the need for development funds? Is IO assistance a two edged sword for the poorer countries? Do IOs make matters worse?

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