Debt Flashcards
Debt crisis
Arab-Israeli war of 1973-74 lead to a sharp increase in oil prices
Western banks allowed developing countries as they would always ask for money
1980s - USA eagerly loaned to Latin America, put a noose around their neck as they were unable to repay debts
1980s - western banks realised these countries may not be able to repay their loans
Many third world countries needed more money but as the banks refused them, they had to default
Reasons for differences in development
PHYSICAL Uneven resource distribution Environmental hazards Desertification ECONOMIC vicious cycle of poverty Trade favours richer, more developed countries Technology gaps SOCIO-ECONOMIC gaps in health and education levels on LEDC and MEDC SOCIAL women largely ignored in development Lack of industrialisation as it differs from traditional culture e.g. Nomadic farming POLITICAL Instability hinders investment Underdevelopment leads to exploitation of LEDC by MEDC Neo-colonialism
What has the IMF proposed?
Loans to help pay back old ones - conditions attached which can harm local industry
Structural Adjustment Packages
HIPC
What is HIPC?
Aims to help those poor countries with ‘good policy performances’ to escape unsustainable debt
41 countries involved with only 29 potentially eligible for debt relief
What was the Jubilee Drop the Debt Campaign?
One of the most successful international initiative
Aimed to campaign for the abolition of unfair debt in developing countries
Campaigned in 166 countries and 28 million people signed the petition
By 2010, 30 of the poorest countries had benefited from $88 billion in debt cancellation
In 10 African countries where debt has been cancelled, there has been an increase in spending of around 40% on education and 70% on healthcare
