How do debt repayment and structural adjustment terms hamper economic development?
- Only wealthy nations need to repay their debts, so it slows their progress.
- This is no longer a problem because debt repayment was completely erased after World War II
- Both measures rob a developing nation of money it could use to invest in social welfare improvements.
- They always penalize highly developed nations rather than underdeveloped ones.
Answer: C. Both measures rob a developing nation of money it could use to invest in social welfare improvements.
Answer Explanation
In developing nations, debt repayments and structural adjustment terms often hamper economic development. Option C correctly identifies the main issue with these measures: they prevent a developing nation from improving social welfare.
Debt Repayment:
When a developing country borrows money from international creditors or organizations, it incurs debt that must be repaid over time. In addition to diverting funds away from domestic investment and development, debt repayment can become a significant burden on a nation’s economy. Education, healthcare, infrastructure, and poverty alleviation programs can be limited by high debt service payments.
Structural adjustment terms:
International financial institutions, such as the International Monetary Fund (IMF) or the World Bank, impose structural adjustment programs on debtor nations in exchange for financial assistance or debt relief. In addition to austerity measures, privatization of state-owned enterprises, trade liberalization, and fiscal discipline, these programs often involve austerity measures. The purpose of these measures is to promote economic stability and growth, but they can adversely affect social welfare and economic development.
Why the other options are not correct
a. Only wealthy nations need to repay their debts, so it slows their progress.
This option is incorrect because every nation, regardless of their economic status, is expected to pay off their debts, so it slows down their progress. It is a standard financial responsibility to repay debt, and if you fail to do so, you may face severe consequences, including lower credit ratings and reduced access to international capital markets.
b. This is no longer a problem because debt repayment was completely erased after World WarII.
This option is not correct because debt repayment is still an ongoing issue for many nations. Many developing nations continue to struggle with high levels of debt and repayment challenges despite receiving debt relief or forgiveness after World War II.
d. They always penalize highly developed nations rather than underdeveloped ones.
This option is not correct because debt repayment and structural adjustment terms apply to all countries with outstanding debts, regardless of their level of development. It is important to note that the impact of these measures depends on the particular economic circumstances of a country and how it manages its debt burden.
Conclusion
Economic development can indeed be hindered by debt repayment and structural adjustment terms, especially for developing nations. Both measures, as correctly identified in option C. It can reduce a country’s ability to invest in social welfare improvements, causing underinvestment in critical sectors and exacerbating poverty and inequality.
When it comes to debt repayment and structural adjustment, a balanced approach must take both economic stability and social development into account. In order to ensure sustainable economic growth while prioritizing citizen well-being, developing nations often face complex policy choices.
Which factors do sociologists suspect were the cause for such a high divorce rate during the 1960’s?
I am Bibisha Shiwakoti a final year BBS student from Janapremi College. I have completed my higher secondary education at Kalinchowk Secondary School.
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