Features of Developing Countries - Essay Example

INTRODUCTION Features of Developing Nations At the initial start of this written; there is needs to begin with making introduction of the key factor of the essay, which primarily focuses on Developing Countries. What is meant by developing countries and what are the features of these nations on the Economic basis. In the first phase of this introduction, there is needs to know that these countries that are called the Developing nations have consist of two third of the whole world, they are also found in parts of the word like in Latin America, Africa and Asia. Developing countries a feature also shows that they depend largely on foods supply from other nations depend on foreign wealth. They are also countries that facing problems of environmental issues, health, education, housing and many sectors of underdevelopment. A developing nation, is that nation that have low standard of living, especially in the Economic, Political and social basis. A country where its people are getting low income, witnessing inflation, poverty and other features can be refer to as Developing nation. These countries can also be called 'Underdeveloped'. An Economist (Gerard Chaliand) who wrote on Developing countries, where he defines what all about developing nations and their features states that "The economically underdeveloped countries of Asia, Africa, Oceania, and Latin America, considered as an entity with common characteristics, such as poverty, high birthrates, and economic dependence on the advanced countries". Some features of developing nations include highly dependent on foreign goods. These sorts of countries always finding market for the finishing goods of developed nations. While in the developing nations most of the Industries are collapse not functioning, properly. As a result, they depend solely on importing goods from abroad for their people. There high rates of poverty in such countries, wide range of poverty and diseases and many other features. Socially, the developing nations are found with high rates of corruption among the elites, whereby even though these countries are economically left behind, and people are suffering from poverty, yet their leaders are found always rich, as they corrupt and steal public wealth for their own selfish interest. Politically and economically, the features of the developing nations include social conflicts that in many of these countries continue to sabotaging their economies. Additionally, another feature of developing nations are those nations that always preferring their economy toward the betterment of Developed countries. Since we have read so far on the features of developing nations, even though in a nutshell, there is a need now to begin discussions on the main subject of the essay. DEBTS CRISES IN DEVELOPING NATIONS According to research conducted on the debt crises in the developing nations, its started dated back to 80s. (Seamus O'Cleireacain) (1990). explained when the crises of debts began in developing nations. He said "The crisis emerged over a weekend in mid- August 1982, when Mexico informed the United States and the International Monetary Fund (IMF) that it was unable to meet its debt payments. Soon, the crisis had engulfed other developing countries. It stalled forty years of economic growth in the Third World, producing the worse recession in Latin America since the 1930s. As the development process slowed, education and child welfare were among the budget items slashed in many countries, causing UNICEF to include the debt crisis among the factors contributing to a slowing in the decline in infant mortality. 1 UNICEF estimated that the slowdown in development had cost the lives of an additional half-million children, raising to fourteen million the number of under five-year-olds who die every year. The debt crisis also inflicted costs on developed country taxpayers and shareholders". At this point, it is important to state that it is noted that the origin of debts problems in developing nations begun since at the end of 70s, when many of oil exporting countries had large amount of extra money. "They put this money into Western banks. The banks then loaned a lot of money to Third World countries for big development projects. However, several factors (a rise in world interest rates, a global recession, and low commodity prices) caused the size of these debts to start growing very fast; several countries began to fall behind in their payments. The amount of money owed by developing countries has increased dramatically since the early 1980's. These countries now owe money to commercial banks and also to organizations like the World Bank, the International Monetary Fund, and to First World governments". (The Third World Debts Crises). One of these problems of debts in developing nations is coming from the leaders of these nations. Debts have continue to the major problems of many of these nations because, many leaders receive debts from developed nations not with the primary aim of boosting their economy, but they use the money they receive for their own selfish interest. While some countries that offers these debt usually gives conditions which at the end would cripple such developing nations. As a result of debts problems, most of the precious resources in such nations are diverted in payment of huge debts especially to the Western Countries. According to a finding on the debt crises in the developing nations, its stated that "Over the past few decades, numerous nations, particularly in Africa and Latin America, funded their development projects through loans from the banks of industrialized nations. Debt and interest payments from these loans from the world's least developed countries today amount to $199 billion per year. This is three times the total amount of aid received from the developed countries. After many development efforts failed, in large part as a consequence of low commodity prices that reduced the earnings of many developing countries, the debts remained, stifling productivity and creating an impediment to further investment in the future. (Debt Retirement and Debt for Nature) An Economist (Anup Sha) (July 2006) explains the scale of the debts crises in developing countries. H e said; "the developing world now spends $13 on debt repayment for every $1 it receives in grants. For the poorest countries (approximately 60), $550 billion has been paid in both principal and interest over the last three decades, on $540bn of loans, and yet there is still a $523 billion dollar debt burden. Debt kills. Some 11 million children die each year around the world, due to conditions of poverty and debt". It is observed that the developing nations must continue to be in debts problems due to the fact that it is use as an instrument by the developed nation as another way of imperialism. Mr. (El-Hadj Guisse) said "The developing countries' debt is partly the result of the unjust transfer to them of the debts of the colonizing States, imposed on the newly independent States when they acceded to international sovereignty: in 1960, the external public debt of these countries already amounted to US$ 59 billion. With the additional strain of an interest rate unilaterally set at 14 per cent, this debt increased rapidly. Before they had even had time to organize their economies and get them up and running, the new debtors were already saddled with a heavy burden of debt". (Abdur R. Chowdhury) also gives his finding on the problems of debts in developing nations, and why these debts always on the increase. He said; "the factors behind the increase in the external debt burden in the developing countries are varied and interrelated. However, a number of studies in the literature have summarized these factors to include, but not limited to, (1) exogenous factors, such as adverse terms of trade shocks; (2) the absence of sustained adjustment policies, particularly when facing exogenous shocks, which gave rise to sizeable financing needs and failed to strengthen the capacity to service debt; this includes inadequate progress in most cases with structural reform that would promote sustainable growth of output and exports; (3) the lending and refinancing policies of creditors, particularly lending on commercial terms with short repayment periods by many creditors in the late 1970s and early 1980s and non-concessional rescheduling terms for most of the 1980s". Internal factors such as selfishness of the developing countries leaders are another problem that is militating in resolving debts in these countries, because most of the leaders are using such medium as their advantage to enriching themselves. Thus they explore all channels in ensuring that they receive debts from developed nations no matter what the future implications against their nations. So, they never think of finding ways to have a lasting solution to debt problems. "Developing country external debt is not only a financial problem. In most cases, it developed according to conditions and interests of dominant capitalists of the countries of the North, in close collaboration with elites of peripheral countries. These alliances often produced complex situations, such as "odious" debt (illegitimate or illegal), the transformation of external debt into public debt - which can often be qualified as "odious" debt or even ecological debt. Odious debts were contracted by local elites against the public interest, to finance sumptuous expenses, corruption and repression of the working classes, often resulting in massacres and torture". (Developing Countries External Debt) Also, since the Western Financial Bankers know that there are gains in given loan to elites of developing nations, they vowed in dong that, leaving the masses of such countries in the burden of such loan, which is said to be a corrupt lending. In such situation such powerful financial institutions help in no small measures toward increasing debts problems in such nations. In an article (Odious Debts Campaign in UK), (2000) it is said that "powerful financial institutions helped generate high levels of debt is that of the loans given by Western bankers and governments to ex-President Mobutu of Zaire. He died recently leaving the now Democratic Republic of Congo with a debt of $13 billion, after huge sums had been salted away in Swiss banks". Before the conclusion of this article, there are needs to know why developing nations would continue to suffer from debts, and it would be very hard for these countries to set free from this phenomenon. (George Macesich) (1991), stated why developing countries would continue to be indebted. He said "The first is excessive reliance on short-term credit, particularly into the short-term interbank market. These credits are callable and can vanish overnight. A borrowing country must replace them with conventional bank loans, thereby making its rescheduling problems all the more difficult. The second difficulty has been the high cost of loans. To be sure, countries like Yugoslavia, Mexico, Brazil, and other leading debtors were sensible to borrow heavily at variable rates in the 1970s. If the world economy boomed, interest rates would rise--but then so would their exports; if it slumped, then interest rates and exports would both fall, as well". CONCLUSION: In conclusion of this essay, we flash back and asses that there are social, political and economic reasons behind the Developing nations debts problems. While additionally, it is noted that these problems would continue to escalate since the nations that are given such loans realized that by doing so, it is another trick of imperialism. They also use that loan given to exploit developing nations. It is also found that the debts problems is caused with the consonant of elites in developing nations, since they are also benefiting from such loans they collects in the names of their countries, but later diverted to their selfish use. Thus it is realized that it would be very hard to solve these problems in such situation. Moreover, the developing nations must realize that political Instability, crises and upheavals in such countries would no doubt continue to contribute immensely toward being in developing stages. Since unless there are political and economic stability, including social stability, a nation can never be push forward to become a developed nation, because countries would never come to invest in such places where there is no certainty politically. Finally, developed nations should endeavor to join hands in forgiving debts of the developing nations, as if such countries are free from debts, then they would have no any restriction toward their zeal for developing to developed countries. References Seamus O'Cleireacain, The Plunge into Debt, Third World and International Policy (1990) (page 1), http://www.questia.com/PM.qsta=o&d=24372226 Gerard Chaliand, Third World Definition and Description, http://www.thirdworldtraveler.com/General/ThirdWorld_def.html Debt Retirement and Debt for Nature, http://www.ratical.org/co-globalize/WtWW/what08.html Anup Sha, Trade Economic Issue, Third World Debts Undermine Developments, http://www.globalissues.org/TradeRelated/Debt.asp The Third World Debts Crises, http://www.newint.org/easier-english/money/debt.html El-Hadj Guisse, Third World Debts a Continuing Legacy of Colonialism, http://www.southcentre.org/info/southbulletin/bulletin85/bulletin85.htm Abdur R. Chowdhury, Foreign Debt and Growth in Developing Countries. A Sensitivity and Causality Analysis Using Panel Data, http://www.wider.unu.edu/conference/conference-2001-2/parallel%20papers/4_1_Abdur.pdf Developing Countries External Debt, http://www.cetim.ch/en/interventions_details.phpiid=276, George Macesich, World Debt and Stability, (1991) (page83), http://www.questia.com/PM.qsta=o&d=9363135 Odious Debts Campaign in UK, http://www.odiousdebts.org/odiousdebts/index.cfmDSP=content&ContentID=367 Read More