SAPs, Debt crisis and Resource curse in Africa

Question 1

Resource curse

Answer 1

inequality, can’t utilise resources

trend in underdevelopment

Question 2

Political policies can…

Answer 2

have a major effect in effectiveness

Question 3

over-reliance and vulnerability to market means…

Answer 3

Hard to plan economic policies
Hit by slumps in global market
Long term commodity prices (natural resources) decreasing in global South

Question 4

Ricardo - comparative advantage

Answer 4

increased production

expansion of capitalism to new geographical locations

Question 5

liberal economic globalisation

Answer 5

removes barriers and protectionism

free flow benefits comparative advantage

Question 6

4 basic components of SAPs

Answer 6

1. currency devaluation
2. removal/reduction of state
3. elimination of subsidies in an attempt to reduce expenditure
4. trade liberalisation

Question 7

Scale of debt - pre 1970

Answer 7

$18 bil

Question 8

Scale of debt - today

Answer 8

$2.7 trillion

Question 9

Other side

Answer 9

Dependency on oil and gas
power of finance and capital
rise of new poles of capital accumulation

Question 10

What did the OPEC do to cause the financial crisis of 1982?

Answer 10

fixed the price of oil

Question 11

Gas crisis increased by…

Answer 11

280%

Question 12

Dramatic increases in the years

Answer 12

1973-74 and 1979-80

Question 13

Recyling petrodollars is..

Answer 13

OPEC = increased income

recycled capital in US banks to lend to developing countries for modernisation and basic needs

Question 14

1981-82

Answer 14

Decrease in export prices associated with global recession

High interests

Question 15

1982

Answer 15

Debt crisis
Mexico = bankrupt
IMF steps in

Question 16

Reasons for SAPs

Answer 16

modernisation = failure
state role = inefficient
comparative advantage needed
neoliberal model = solution

Question 17

Impact of debt crisis

Answer 17

GDP fell to 1.7% (1980-90)
1988 - 1 billion chronically underfed
violence

Question 18

Manufacturing declined: modernisation reversed

e.g. Zambia

Answer 18

1980s: 25000 employees
2002: below 10,000

Question 19

Increased developing countries debt because…

Answer 19

Loans = hard currency
Value of exports decreased
re-financing of loans

Question 20

To reduce debt…

Answer 20

Reform
Relief
Growth

Question 21

1996

Answer 21

debt cancellation of $97 billion

Not all benefitted: vulture funds, re-accumulation of debts

Question 22

Economic cycle =

Answer 22

periods of boom and bust

Question 23

Who did well during this period?

Answer 23

China

Question 24

Did debt cause poverty?

Answer 24

No, but worsened it.

Trade = growth, but doesn’t escape relative poverty