Global interdependence 2 Flashcards
What is the aim on the IMF?
Aims to maintain a stable international financial system, and this promotes free trade and globalisation.
What does the IMF do?
The IMF provides loans to countries facing short-term balance of payment difficulties. For example, in 2008 Greece received the first in a series of IMF loans when its foreign currency earning were insufficient to pay its existing debt obligations.
What is a criticism of the IMF?
The IMF has been criticised for promoting a ‘western’ model of economic development that works in the the interest of developed and their TNCs.
Define colonialism.
The building and maintaining of colonies in one territory (or number of territories) by people from another territory.
How had debt relief been made more effective?
For debt reduction to have a meaningful impact on poverty, the additional funds made available need to be spent on programmes that are of real benefit to the poor.
Before the HIPc initiative, eligible countries spent on average more on debt serving than on education and health combines.
Now these countries have significantly increased their spending on education, health, and other social services.
However, to qualify for assistance countries have to pursue IMF and World bank supported adjustment and reformed programmes.
(undermines sovereignty of country maybe/ability to make their own decisions?).
Which countries were granted MDRI?
What is some SLD of the HIPC initiative?
The HIPC initiative has led to the LDDCs worst 23 countries reducing their total debt by 2/3s.
When agreements are in place, cash debt services savings in these countries are also substantial - about $1.1 billion annually in the next three years.
These countries have been receiving an average of about $10 billion per year in grants and concessional loans.
What are critiques of the MDRI?
Critics say that developed countries should do more to help the poor countries through debt relief and by opening their markets to exports from developing countries. Relief strategies do not directly assist the poor especially with corruption strife.
There is a danger that countries will run up further debts under the misapprehension that their debts will be cancelled.
What is debt relief a overall a good thing?
Some object to the very concept to the very concept of poor countries borrowing for their development. But, borrowing remains a crucial part of external assistance. In fact, HIPCs already receive significant net transfers of assistance in the form of highly concessional loans
What is the goal of debt relief? (the HIPCs initiative)
The goal of the debt relief initiative is to help countries achieve debt sustainability, and is focused specifically on the most highly indebted poor countries.
What is an example of mismanaged lending?
Leading by the west in the 1960s and 1970s. The USA spent more money that in had (leading to quantitative easing) Saudi Arabia pegged into the money so as its value decreased they lost money.
The 1973 oil crisis led to inflation so more lending was made to unstable which then defaulted on their borrowings.
Mismanaged, the poorest countries suffer as debts increase and spending on education and healthcare suffer (spiral of decline.
What is the foreign exchange gap?
Many LICs lack the hard currency to pay for imports such as oil and machinery that are vital for development.
What is a savings gap?
Savings gap where population pressures and other drains on expenditure prevent the accumulation of enough capital to invest in industry and infrastructure.
What is a technical gap?
Shortage of skills needed for development
Define aid
Aid is assistance in the form of grans or loans at below market rates.
