ECN 410 Chapter 13 & 14 Flashcards Quizlet PDF

Preview

Summary

Download ECN 410 Chapter 13 & 14 Flashcards Quizlet PDF

Description

2/22/2021

ECN 410 Chapter 13 & 14 Flashcards | Quizlet

Home

Social Science

Economics

Development Economics

ECN 410 Chapter 13 & 14 Leave the first rating

STU DY

Flashcards Learn Write Spell Test PLAY

Match

pwei

Terms in this set (36) General

- Balance of Payments (BOP)

Considerations

- Current Account - Surplus and Deficit - Capital Account

Cash Account or https://quizlet.com/110300741/ecn-410-chapter-13-14-flash-cards/

Three forms: 1/10

2/22/2021

ECN 410 Chapter 13 & 14 Flashcards | Quizlet

International Reserve

- Hard currency

Account

- Gold - Deposits with IMF

"Positive" Effects

1. Any sale of goods or services abroad (export)

(Credits)

2. any earning on an investment in a foreign country 3. any receipt of foreign money 4. any gift or aid from a foreign country 5. any foreign sale of stocks or bonds

"Negative" Effects

1. Any purchase of goods and services abroad

(Debits)

(import) 2. any investment in a foreign country 3. any payment to a foreign country 4. any gift or aid given abroad 5. any purchase of stocks or bonds from abroad

Deficits and debts

- inflow - outflow - amortization

The issue of payments

Some initial policy issues

deficits

- international reserves - restrictive fiscal and monetary policies: - structural adjustment - stabilization policies - Special drawing rights (SDRs)

Net capital inflow, Fn,

Fn=dD

is Basic transfer , BT, is BT = dD - rD = (d-r)D Where d is percent increase in total debt D is total debt r is the average interest rate https://quizlet.com/110300741/ecn-410-chapter-13-14-flash-cards/

2/10

2/22/2021

ECN 410 Chapter 13 & 14 Flashcards | Quizlet

Origins of the 1980s

- OPEC oil price increase

Debt Crisis

- Increased borrowing - Excess of imports - Lagging exports

Origins of the Debt

- Debt-servicing obligations

Crisis

- Debt-service payments - Debt-servicing difficulty - Oil shocks

Developing countries'

- Curtail imports and restrictive fiscal and

two options (debt

monetary measures

crisis)

- More external borrowing

IMF Stabilization

- Macroeconomic instability

Program

- stabilization policies - Four basic components of IMF stabilization program: 1. Liberalization of foreign exchange and imports control 2. Devaluation of the official exchange rate 3. Stringent domestic anti-inflation program 4. Opening up of the economy to international commerce

IMF Stabilization

- Such policies can be politically unpopular

Program (cont'd)

because they hurt the lower- and middle-income groups - Less radical observers view the IMF as neither a developmental nor an antidevelopmental institution

Tactics for debt relief

- Debtors' cartel - restructuring - brady plan - debt for equity swaps

https://quizlet.com/110300741/ecn-410-chapter-13-14-flash-cards/

3/10

2/22/2021

ECN 410 Chapter 13 & 14 Flashcards | Quizlet

- debt for nature swaps - debt repudiation

What is odious debt?

Sovereign debt used by an undemocratic government in a manner contrary to the interests of its people should be deemed invalid

Causes of the crisis

Economic impact on developing countries

and challenges to

- Economic growth

lasting recovery

- Exports - Foreign investment inflows - Developing-country stock markets

Economic impacts on

- Distribution of influence among developing

developing countries

countries - Worker remittances - Poverty - Health and education - General policy framework

International Flow of

Three sources:

Financial Resources

- Private direct and portfolio investment - Remittances of earnings by international migrants - Public and private development assistance

Multinational

Recent growth of foreign direct investment (FDI)

Corporation (MNC)

Traditional arguments

- Filling savings

in support of private

- Foreign exchange

investment

- Revenue - Management gaps

Traditional arguments

- Two main perspectives of the arguments:

against private foreign

Economic and ideological - Transfer pricing

https://quizlet.com/110300741/ecn-410-chapter-13-14-flash-cards/

4/10

2/22/2021

ECN 410 Chapter 13 & 14 Flashcards | Quizlet

investment: Widening gaps

Why donors give aid

Political motivations Economic motivations: two-gap models and other criteria - Foreign exchange constraints - Growth and savings - Technical assistance - Absorptive capacity - Economic motivations and self-interest

The two-gap model:

I...