debt Flashcards
debt relief
recognsising debt and therefore makinf it more manageable by either significanlty reducing it or making it ore manageable by increasing time allowed to pay for example
issues with debt
must pay interest on the debt
less of an issue with HICS
as HICS have large assets against which they can borrow money so debt is more manageable
compared with LICs who are borrowing due to necessity and have little assets. For example Shri Lank repaying Iran for 251 dollars worh of debt in tea
reasons for deficits
exsessive spending
low GDP growth
Budget compiance- the governement exceeding spending plans
tax evasion- where tax incomes have fallen below the expected level
hidden borrowing- allowed many countires including greece and italy to hide their borrowing meaning places exceeded their recomended limits of debt
debt relief sucesses
debt service payments declined
countries have more cautious borrowing, policies, and strengthen their management
exports increase
debt relief weaknesses
encourages a shift to cash crops for exports
encourages the sale of state assets to TNCs leading to pland degradation and deforestation
political instability means basic services are not provided
types of aid
relief aid
emergency aid or humanitarian aid
given ti people with immediate threat and acts as a ‘bandage when in threat
development aid
given by HICS to support economic deveopment
through food aid, project aid, programme aid, budget support, technical assistance
tied aid
aid that must be spent in the donor country on goods or services
limits
factors affecting trade
historical influences trade blocks/unions trade policy exchange rates demand for products/ economic situation resource endowment locational advantage
resource endowment
includes land, labour and capital,
bewing ednowed with more natural resources means countries have excess after it is locally consumed which is able to be traded. for example OIL in countries such as iraq or iran
these countries can use their richness to diverify ands create products out of the resource
comparitive advantage
means one country can produce a product alot cheaply then ant others, able to produce a good or service at a lower opportunity cost than he other
locational advantage
mwans some areas have lower transport costs if cities are near ports or hubs,
manufacturing in canada being close to the huge US market
historical
often based on colonial ties,
uk still has significant links with the commonwealth,
trade blocs
a group of countries that share trade agreements e.g. EU ior the NAFTA
