Rich World Poor World
Rich World, Poor World
Samantha Valentine
Dr. Rochelle Steward-Withers
131121
18 September 2012
Word count: 2275
Debt is made when one party owes party money (Oxfam, 2005). Just like people, governments of both developed and developing nations borrow money in order to function well and to maintain their economies (George, 1994). Debt is the economic mode that promotes economic activity in the global market (Lomborg, 2004). The acquisition of debt comes through loans, grants and aid that are provided to developed and developing nations by multilateral creditors and bilateral lenders (George, 1994). These creditors are international institutions such as the International Monetary Fund (IMF), the World Bank (WB) and other banking institutions (Millet & Toussaint, 2004). The international community with their neo-liberal approach and capitalist notions of eradicating poverty was through, economic growth and development (Schaeffer, 2009). Due to increased profits (petro-dollars) made off increased oil prices developing countries were encouraged and some even coerced to borrow money from developed nations in the 1960’s and 1970s (George, 1994). Although their profits were invested in Western banks it did not yield impressive returns thus encouraging the global South to acquire debt (George, 1994). The global South grasped the opportunity and borrowed money to advance their infrastructure (roads and dams) and also fund industrial projects in their countries (Jarman, 2006). Some countries even borrowed more money what they needed. So keen the developed nations were to borrow money that they disregarded any moral and ethical standards they might have had, and granted loans knowingly, to corrupt governments and military regimes (George, 1994).
Unfortunately like everything else this spending spree did not last and came to a sudden halt in the 1980’s, which even left the United States economy in a recession (Study Guide, 2012). Developing countries had
Samantha Valentine
Dr. Rochelle Steward-Withers
131121
18 September 2012
Word count: 2275
Debt is made when one party owes party money (Oxfam, 2005). Just like people, governments of both developed and developing nations borrow money in order to function well and to maintain their economies (George, 1994). Debt is the economic mode that promotes economic activity in the global market (Lomborg, 2004). The acquisition of debt comes through loans, grants and aid that are provided to developed and developing nations by multilateral creditors and bilateral lenders (George, 1994). These creditors are international institutions such as the International Monetary Fund (IMF), the World Bank (WB) and other banking institutions (Millet & Toussaint, 2004). The international community with their neo-liberal approach and capitalist notions of eradicating poverty was through, economic growth and development (Schaeffer, 2009). Due to increased profits (petro-dollars) made off increased oil prices developing countries were encouraged and some even coerced to borrow money from developed nations in the 1960’s and 1970s (George, 1994). Although their profits were invested in Western banks it did not yield impressive returns thus encouraging the global South to acquire debt (George, 1994). The global South grasped the opportunity and borrowed money to advance their infrastructure (roads and dams) and also fund industrial projects in their countries (Jarman, 2006). Some countries even borrowed more money what they needed. So keen the developed nations were to borrow money that they disregarded any moral and ethical standards they might have had, and granted loans knowingly, to corrupt governments and military regimes (George, 1994).
Unfortunately like everything else this spending spree did not last and came to a sudden halt in the 1980’s, which even left the United States economy in a recession (Study Guide, 2012). Developing countries had