Embedded Files
IB Syllabus Requirements
Foreign debt and its consequences
• Outline the meaning of foreign debt and explain why countries borrow from foreign creditors.
• Explain that in some cases countries have become heavily indebted, requiring rescheduling of the debt payments and/or conditional assistance from international organizations, including the IMF and the World Bank.
• Explain why the servicing of international debt causes balance of payments problems and has an opportunity cost in terms of foregone spending on development objectives.
• Explain that the burden of debt has led to pressure to cancel the debt of heavily indebted countries.
Theory of knowledge: potential connections
For each factor, what would you consider to be sufficient evidence that it plays a role in enhancing or
inhibiting development?
Notes from “4.7 – The Role of Debt”
Indebtedness, Development and Solutions to Indebtedness:
Some view on the IMF's role in Pakistan:
It's not the IMF's fault it wasn't so successful in Pakistan
The IMF is to blame for failure in Pakistan
Find more case studies about the impact of the IMF and/or the World Bank on developing countries
Structural Adjustment Policies Effectiveness in Africa
Ireland
The Philippines
More Econ in the News
“4.7 – Econ in News Burns” (2nd Thoughts about 1st-Degree Burns for Lenders to 3rd World Nations)
More review as you see fit:
1. Practice Case Study: 45 minutes
Aid and Development Case Study Markscheme
2.
3. Activity: Exploring HIPCs through an article
Read the following article about Debt and Developing Countries and answer the following questions:
1. What do the following abbreviations stand for:
a. HIPC
b. MDRI
c. OECD
2. How has the ongoing financial crisis affected the developing countries? Use an AD-AS diagram to explain. (Look for direct clues in the article)
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