Foreign Aid & International Debt

Vocabulary to Know O World Bank: UN agency that provides _____________ & advice to developing nations to help advance their economy O International Monetary Fund (IMF): UN agency that promotes international trade & economic cooperation while stabilizing _____________________ & developing programs for countries that require economic adjustments & reform O Multinational corporation (MNC): a large ____________________ that produces & sells goods in more than one country O First World country: Capitalist, highly industrialized, technologically advanced & usually ________________________ countries with high standards of living O Third World country: a poor nation with low economic development, typically _____________________________ on the industrialized world

Causes of the Debt Crisis O Colonial powers transferred their _____________ to former colonies at high interest rates O Forced to repay loans accepted by corrupt governments/____________________ O Poor __________________________ practices of wealthy nations during 60s & 70s O Because large amounts of money are diverted to loan repayment, debt has crippled the _________________________ of many poor countries

Debt: Solutions O Highly indebted poor countries (HIPCs): Countries with high levels of poverty and debt are eligible for special assistance from the World Bank & ________. O Structural Adjustment Programs (SAPs): loans given by World Bank & IMF on the condition that the country adopt more ___________ market oriented policies O Debt reduction: Reducing the amount that needs to be ___________________ O Debt forgiveness: __________________________ all remaining debt payments O Foreign Aid (see next slide)

Foreign Aid O multilateral aid: many governments contribute to a joint organization O Example: ______________, World Bank O bilateral aid: one government gives aid directly to another, often in the form of ___________________ O Example: CIDA O non-governmental aid: NGOs representing religious groups, non-profits and _______________ organizations provide aid O Example: Red Cross, Doctors Without Borders, World Vision, OXFAM

Foreign Aid O Corrupt governments often divert foreign aid dollars into their __________________________ O In the past, foreign aid focussed on __________ or one time loans O In recent years, foreign aid has: O supported more ________________________ sustainable projects at the local level O focussed on helping poor nations reduce their debt and ___________________ their economies