StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Debt Crisis in Developing Countries - Essay Example

Comments (0) Cite this document
Summary
In the 1980's the debt problem emerged whereby Argentina defaulted to pay for its international debt, this led to the emergence of a debt facilitating plan introduced by the World Bank and the international monetary fund (IMF). The paper focuses on the problem faced by these countries, the causes of high debt levels and the solutions to the debt problem in developing countries.1
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER96.5% of users find it useful
Debt Crisis in Developing Countries
Read TextPreview

Extract of sample "Debt Crisis in Developing Countries"

Download file to see previous pages However despite the many problems associated with developing countries it is still possible to solve the debt problem and to attain high levels of development, this can be done through well laid strategies that involves all the sectors in an economy and this will be analyzed in this paper.
Debts in developing countries have increased over the years, many factors have caused this increase in debts including unfavorable terms of trade, rising international interest rates, increasing protectionism in the international market, irresponsible lending by international finance organizations and the rescheduling of punitive terms where countries delay payment.2
The above mentioned factors are external factors and that there exist internal factors that have led to the increased problem of debts include economic mismanagement, unsustainable government deficits and the maintenance of unrealistic exchange rates. All the above factors have led to the increased debt problem in developed countries.3
As a result of unfavorable terms of trade countries are faced with the problem of balance of payment, developing countries mainly export agricultural goods and in turn import machinery and electric goods, the value of imports in most cases exceeds the value of exports and as a result the increasing debt problem, countries are faced with an increasing balance of payment which lead to rising debts.
Rising international interest rates:
Most international finance institutions will raise their interest rates which in most cases affect developing countries, for example a country may obtain funds from a financial institution but the country may face increasing interest rates on the loan which will increase the pay back value where in most cases the country may end up paying more than double it acquired from the institution, therefore this has added to the problem of debts in developing countries.
Increased protectionism in the international market:
Increasing protectionism in the international markets has led to an increase in the debt problem in the developing countries, most of the products produced in developing countries are exported to developed countries, when the products are faced with high levels of protectionism in the developed countries the developing countries will experience a reduction in exports leading to unfavorable balance of payment, this means that the country will experience debt problems.
Irresponsible lending by finance institutions:
Financial institutions will lend money to countries without taking into consideration the current state of an economy, a country may receive a lot of funds which will end up not being used for their intended purpose, finance institutions will lend the developed countries large sums of money and also they lend money even before previous payments are not yet complete leading to the increased debt problem in the developing countries.
Rescheduling of payment terms:
Financial institutions will change payment terms over time and this may end up increasing the debt problem in developing countries, such terms include the increase in interest rates, the delay of payments has also led to the increasing debt problem in d ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Debt Crisis in Developing Countries Essay Example | Topics and Well Written Essays - 3000 words”, n.d.)
Retrieved from https://studentshare.org/miscellaneous/1532077-debt-crisis-in-developing-countries
(Debt Crisis in Developing Countries Essay Example | Topics and Well Written Essays - 3000 Words)
https://studentshare.org/miscellaneous/1532077-debt-crisis-in-developing-countries.
“Debt Crisis in Developing Countries Essay Example | Topics and Well Written Essays - 3000 Words”, n.d. https://studentshare.org/miscellaneous/1532077-debt-crisis-in-developing-countries.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Debt Crisis in Developing Countries

Debt Cancellation and its impact on poverty in developing countries

...? DEBT CANCELLATION Cancellation of developing countries debt would NOT solve the poverty problem ……………………… College………………………………. submission …………………. Introduction Millions of people die due to hunger, AIDS and other poverty related diseases every year in most poor countries worldwide. In recent years, there were relentless calls for reduction or cancellation of debt owed by poor countries with a view to reduce poverty existing in these countries. Many economists and various other experts as well as literatures have observed that debt relief has been a strategically effective way to reduce poverty in these countries, but it is not year clear whether debt relief is a win-win strategy that benefits developing countries to reduce poverty...
5 Pages(1250 words)PowerPoint Presentation

Developing Countries

...? Developing Countries Culture or ethni plays an important role in the development of a country. Politics, education and economic development of a developing country are associated with the race, ethnicity and culture of that country. Countries which have superior abilities in utilizing or mobilizing its internal resources may develop rapidly than countries which have inferior abilities in doing so. In fact most of the developing countries are not able to develop properly; not because of the lack of resources, but because of the internal constraints it may face from religions or races. Pakistan and India are two developing countries in Asia and both of them have similar internal resources. However, India is able to develop rapidly than...
5 Pages(1250 words)Research Paper

Debt Crisis

...?United s Debt Crisis Introduction The debt crisis began when the Federal Reserve slashed interest rates to after 9/11 and the Dot com bubbleburst, to boost the US economy. 1% was a very low return on investment. However, this meant that banks could borrow at very low rates. Ultimately, cheap credit was easily available to banks for borrowing. Details of the Crisis Shadow Banking comprises of financial institutions such as investment banks which do not come under the category of commercial banks and hence were not regulated by the US federal government. The debt/equity ratio increased from 15:1 to 30:1 after the US Securities and Exchange Commission allowed shadow banks to borrow as much as their own risk management departments considered...
4 Pages(1000 words)Essay

European Debt Crisis

According to Investopedia (2012) the crisis led to the reduction of the confidence of the market for European businesses and economies. In contrast, according to the version of Constancio (2012), the European sovereign debt crisis emerged only in spring 2010. The European sovereign debt crisis is the climax of the banking crisis resulting from the demise of the Lehman Brothers and the resulting bailout extended by governments to their banking system (Constancio 2012). In other words, it is held that the European debt crisis started out as a financial crisis from the Lehman Brothers. In the climax of the crisis, government was forced to support the financial system, creating large debts for government leading to the sovereign debt...
6 Pages(1500 words)Essay

Developing Countries

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 charac...
9 Pages(2250 words)Essay

International Debt Crisis

These OPEC nations deposited much of their profits in commercial banks.; Sseeking for new investment opportunities, these banks issued loans to developing countries without strictly monitoring how loans were used. Some of these loans loans didn't even not meeting the minimum standard of social, ecological and economic viability; they and only enriched a small group of people such as government officials and small elites.
Meanwhile, extremely tight monetary policies were used to control inflation, which contributed to the rising interest rate, high cost of fuel and world recession, therefore making it . It was difficult for these "Global South" countries to repay their debts., Ssome economists even used the term "'moral hazar"...
5 Pages(1250 words)Essay

The International Debt Crisis

...The International Debt Crisis INTRODUCTION The origin of the international debt crisis of 1980s in Latin America rooted to a shift from government borrowing to commercial borrowing. It is evident from the trend in the Latin American economies that a boom was followed by a slump or recession in the economy, adhering to the economic fact that neither recessions nor booms are long-lasting. The countries in Latin America were mostly third-world or developing nations and required huge amounts of capital to restructure its economy or improve its infrastructure and other facilities. There were certainly not enough resources available to them to generate such huge amounts of capital causing them to rely on foreign capital for development...
5 Pages(1250 words)Essay

European Sovereign Debt Crisis

Task European Sovereign Debt Crisis The European Union’s inability to handle the debt crisis in Greece is shaking the financial markets across the entire continent. The impacts of the debt crisis are being felt across the money, valuing of capital and derivatives. The euro’s value is deteriorating on a daily basis and the costs involved in protecting commercial bonds are on the increase. The values of capital goods have also been on the decline around the globe. There has been an increase in the investors’ fear concerning the market trends around Europe (Eichengreen, 2002). There is a growing concern among the investors that the union will not be able to keep these impacts from spreading throughout the continent. Major investors s...
2 Pages(500 words)Essay

The Greek Debt Crisis

... spreads in the banking sector of the economy has adversely affected the growth and development of the economy and has led to the sovereign debt crisis in Greek in the long period of time. The increase in the household debt was ignored by the government prior to the crisis since the asset to debt ratio of the country was favorable and it expected to repay of its debt with the amount of assets available in the economy. The debt to GDP ratio of the country was very high and it almost exceeded 100% of the Gross domestic product. This ratio has adversely affected the growth and development of the economy and it has created several challenges in maintain fiscal policy (Perloff, 2012). Figure 1: Increase in debt (Woods, 2010) The above figure...
8 Pages(2000 words)Assignment

The International Debt Crisis

Pope аnd Nelson Mаndelа, hаve cаlled for the eliminаtion of debt, techniciаns hаve not found solutions sаtisfаctory to both debtors аnd creditors. Pаrt of the reаson for this lаck of consensus is thаt debt does not exist in а vаcuum. Rаther, it must be understood within the broаder context of nаtionаl governаnce аnd economic mаnаgement аs well аs the globаl politicаl economy, especiаlly the internаtionаl finаnciаl аrchitecture. The debt problem is intimаtely relаted to openness аnd the cаpаcity or lаck thereof for competitiveness аnd beneficiаl globаlizаtion. Those countries unаble or unwilling to tаke аdvаntаge of globаlizаtion hаve the highest debt burden. In the following pаper, I will be discussing internаtionаl debt crisis th...
15 Pages(3750 words)Coursework

Purchasing Power Parity Across Countries

The purpose of this study is to examine how much significance may be attributed to real exchange rates in assessing differences in purchasing power parity between various countries. An assessment of the correlation between the two variables will be undertaken in order to determine whether they impact each other in the short and long term.
The purchasing power parity between various nations depends to a great extent upon various factors which are the indicators of how well the economy is performing, such as imports-exports, consumption, productivity and trade, policy instruments, world interest rates and real exchange rates. The correlation between some of these macroeconomic variables is expressed in the Harbinger-Laursen-Met...
12 Pages(3000 words)Research Proposal

Can E-Commerce and Alleviate Poverty in the Developing World

On the other hand, this research is rather indicative of the first trends characterized by the expansion of e-commerce globally. E-commerce has become today the main ‘tool’ for the development of business activities even for companies that were traditionally related to specific regions or companies that have rejected primarily the e-commerce as a ‘tool’ for the increase of their performance. On the other hand, it should be admitted that the USA is the country where is e-commerce has been chosen as a primary tool of the trade for business activities. Other countries around the world are also participating actively in the use of e-commerce as a valuable entrepreneurial strategic tool. It should be noticed how...
15 Pages(3750 words)Assignment

S&T Debt Factors

The agreement contains a credit default contracts that include credit default swaps, default index contracts, credit default options, and credit default basket options. One can use these as part of the mechanism that is collateralized by debt obligations. The goal should be to establish a price for a given risk and controlling credit based on risk. The credit can be allowed by minimization of risk. Credit controllers should develop versatile tools that transfer risk away from a lender’s balance sheet.
d) With reference to the proposed debt counseling business, illustrate and explain exactly how you would organize the debt counseling operation, taking particular care to explain how and when you would receive payment for...
6 Pages(1500 words)Case Study

Developing Professional Practice Portfolio

I work in a very busy outpatient department that includes many different clinic settings.  Most recently, the oral surgery, maxillo-facial surgery, and plastic surgery departments have become part of our directorate as a result of reorganization with in the trust. Although I have always considered myself to be a competent, confident professional, I found working in this reorganized department very stressful. The unit seemed to be very poorly organized with staff shortages and inadequate facilities. I was most surprised to discover that there were no documented records for patient wound care services provided in the clinic. I found this latter situation to be unacceptable from a professional standpoint. Some of the patients in...
6 Pages(1500 words)Essay

The Globalization Policies in Different Countries

Most of the countries are still confused about the extent up to which foreign participation can be allowed. Everybody has the opinion that international trade can help the development of the economy and infrastructure in a country. Critiques of foreign participation argue that the big foreign retailers will exploit the wealth of a country and the small scale industries of a country will be destroyed by allowing the entry of foreign business tycoons and MNC’s. It is interesting to analyze the pros and cons of international trade.
From the above light green curve, it is clear that international trade has increased gradually from 1994 till 1997. In 1998 through international trade in this region had decreased a bit, it aga...
6 Pages(1500 words)Coursework

Developing a Research Base for Intravenous Peripheral Cannula Resites

...Context of the Paper To begin with, the of the paper is very much apt for the content. Although the could have come up with a more direct title, the title “Developing a Research base for Intravenous Peripheral cannula re-sites. A randomized controlled trial” captures the essence of the paper and what the authors aim to address. They, however, could have made it more direct to the point by maybe saying that the study is about a comparison between 3 day cannula re-sites and cannula re-sites as dictated by clinical condition. Nonetheless, the chosen t title is suitable enough to briefly inform the reader of the topic of the research. Two hypotheses were tested in this paper. There are two groups that were compared in the paper... of the Paper ...
6 Pages(1500 words)Case Study

Developing a Strategy to Enhance Workplace Learning in Workplace at Travelex Foreign Exchange

As earlier stated, I have chosen to answer Option No. 1 which is about drafting and crafting a strategic plan which can be implemented in my workplace as a learning workplace on the basis of its analysis and identification made in the earlier assignments. As also required, the initial paragraph, following this, makes a brief review of what has been done in Assignments 1 and 2. Since as a Training Coordinator, my job entails the induction, training and assessment of the progress of the new hires, I have focused my answer to these three areas and divided the paper into Induction and Training, and; Assessment/Evaluation.

The first assignment was about the physical and social environments of the workplace and in that assign...
8 Pages(2000 words)Assignment

The Effects of Financial Crisis on Supplier Selection Criteria of the Oil and Gas Industry Equipment Market

It is a difficult task to find those vendors who not only have the adequate quality and quantity of the needed raw materials but who also have an attitude of efficiency and display commitment to customer service (Sonmat, 2006). Further, organizations also strive to locate and select vendors who can be depended upon for long term relationship.

The number of factors or attributes desired from the vendor is vast, and different organizations and different industries place different importance on the attributes (Sonmat, 2006). Some of the vendor attributes may gain importance owing to the nature of the industry, for example, in the case of consumer perishables suppliers, like fresh vegetables or fruits, the buying firm would...
20 Pages(5000 words)Literature review

Bernard Madoff : A Scapegoat of the Economic Crisis

Darwin was condemned and treated with contempt by the Church for proposing the theory of evolution that linked all living matter in the earth, including humans. In the case of Bertrand Russell, he was imprisoned as a conscientious objector, for expressing his opposition to British participation in the First World War. These are typical examples of people being wrongfully punished when they were guilty of no crime or fraud or misdoing. It would be highly improper to associate Bernard Madoff with the aforementioned luminaries, for he was truly guilty of carrying out the biggest financial fraud in modern history. At the same time, it would be simplistic to classify him as a victim of the contemporary judicial system. The truth, in fa...
6 Pages(1500 words)Assignment

Developing of the Central African Republic

CAR is known to be one of the poorest nations in the African continent, apart from its frequent dependence on international donations in terms of food, clothing and medicinal supplies, CAR has also been a war zone for decades. The essay will relay more information on the various plights that children born in the Central African Republic go through while growing up.
Apart from most of the children being orphaned at a tender age due to maternal related problems or diseases such as HIV/AIDS, which is rampant in the nation, most of these children are victims of child trafficking, which is big business in the CAR (Lindborg). Lots of children from as little as 4 years normally go missing without a trace and the fact that the govern...
7 Pages(1750 words)Term Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Debt Crisis in Developing Countries for FREE!

Contact Us