Developing Countries and the World Economy
Developing countries and the world economy are not opposites, but they are incompletely or not at all integrated in world trade , their trade structure is, due to the colonial era , one-sidedly oriented towards the production of cash crops , the terms of trade are extremely unfavorable for them and their public foreign debt is increasing explosive. In 1987 (with the exception of OPEC countries) they denied only 16% of world trade. The exports , which are of fundamental importance for industrial development and economic growth, are usually limited to a few products . Up to 70% are purely agricultural or mineral raw materials , while imports mainly consist of capital goods . Many countries receive over 50% of their foreign currency purely from the export of a single raw material. At the world industrial production they are involved to just 12%. The developing countries receive almost 22% of the exports from the industrialized countries, the industrialized countries almost 100% of the exports from the developing countries. The " Group of 77 " was founded in 1964 at the first United Nations Conference on Trade and Development (UNCTAD) as the mouthpiece of the originally 77 developing countries . The group of 77 pointed out that the structure of world trade relations disadvantaged developing countries and therefore called for a " New World Economic Order" (NWWO). They also demanded greater participation in decision-making processes on an international scale, stabilization of the markets, greater control over multinational companies, and better integration into the world economic system.
The dependence on unilateral raw material exports creates serious problems for developing countries . Fluctuating world market prices and production losses make foreign exchange income incalculable in advance, which is a major factor of uncertainty when planning the national budget . In addition, there is particularly severe competition from other suppliers or substitute products , as well as the restrictive trading practices of many industrialized nations. Because of this high competitive pressure, the developing countries cannot cut their production, but are more likely to be forced to increase it even further, which manifests itself in an increasing fall in prices . The different price developments of raw materials and industrial products also have an inhibiting effect on development. Due to the falling raw material prices, the countries can use their export revenues to import fewer and fewer industrial products, which are, however, needed for economic development.
Foreign trade
A country's economic development is mostly dependent on foreign trade . Deliveries of raw materials , finished goods , capital and technical knowledge take place through him . Foreign trade also opens up global sales markets and thus the acquisition of foreign currency, which is required for imports. Developing countries primarily produce and export agricultural products , usually cash crops , and raw materials. The reason for this is the mercantilism from the colonial era, according to which raw materials are exported from developing countries and finished goods from industrialized nations. This created a monostructure of exports on the part of the developing countries. Due to falling terms of trade, which describe the exchange relationship between imports and exports, price fluctuations and falling world market prices as a result of market saturation with products from developing countries, developing countries increasingly found themselves in a critical situation. This problem has been exacerbated by substitution, increased recycling and strong competition among global market providers, since the demand and the prices of raw materials continue to fall. In addition, industrialized countries try to protect their industries from competition for cheaply produced goods from developing countries through special tariffs and import restrictions . Economic blocs such as the EU , ASEAN , NAFTA and MERCOSUR are increasingly developing across industrialized and emerging countries. Within these alliances one can act freely, but externally they protect themselves through protectionism .
Foreign debt
The capital to finance investments cannot be raised by saving. Likewise, the price increases for energy , food and finished products can not be covered by increasing export earnings, which means that developing countries are dependent on capital imports. At the beginning of the 1970s, during the oil crisis , large amounts of money were invested in developing countries by the oil sheikhs via the banks due to the rising oil price , as a country was considered a safe debtor. High interest rates and bad investments led to a threatening increase in foreign debt. In the 1980s, when developing countries had to repay more interest and debts than they could afford, the first countries were declared insolvent ( Mexico , August 13, 1982). Despite partial debt relief, a complex of increasing indebtedness and increasing loan requirements arose in order to be able to make repayments of development aid and interest payments. The repayment of debts is only possible if the cost of living in the indebted countries is drastically increased, which mainly affects the poor and leads to even greater poverty and misery . An effective way to curb inflation and debt is to cut government spending . Cancellation of necessary food imports or imports of spare parts for machines are the means of choice to generate foreign currency for debt servicing. This results in a decline in the willingness of companies to invest, a decline in productivity , unemployment and neglect of supplying the population. World Bank data shows that developing countries make more repayments and interest payments to industrialized countries than they receive in terms of new credits and loans.
Above all, falling export revenues, rising interest rates, high oil prices , the high dollar exchange rate , rising inflation rates in developing countries and inefficient projects make developing countries' indebtedness a persistent problem. In addition, there are the high costs for infrastructure and prestige objects , as well as for military armaments , the increasing import of food, as their own agriculture has been neglected, and luxury imports for the wealthy classes of the population. Therefore, because of the greater risk, many banks have significantly restricted the supply of developing countries with shorter-term loans and the developing countries are forced to ask their creditors to reschedule debts.
There is no uniform solution for all debtor countries , but there is generally more favorable global economic conditions, such as the dismantling of protectionism and the opening of markets, interest rate cuts, monetary stability and the willingness to grant developing countries new loans. At the same time, the developing countries must not allow their profits to be consumed by debt servicing, but must invest in a way that promotes growth. A growth dynamic must be achieved again, from which own strengths and initiatives can grow.
In 1996 the World Bank and the International Monetary Fund (IMF) decided on an initiative to reduce the debt burden of the most heavily indebted countries. In 1999, the G7 group expanded this debt relief initiative, the HIPC initiative . 36 heavily indepted poor countries ( HIPC ) are to be granted debt service relief totaling 71 billion US dollars. On average, the states are canceled two-thirds of their debts - this also includes individual bilateral debt cancellation from individual creditor countries . However, the debt relief is tied to various conditions: economic and social policy reforms and the use of the funds to fight poverty. In June 2005, the finance ministers of the G8 countries decided on further debt relief, which would cancel the liabilities of the countries qualified for the HIPC initiative of up to an additional 55 billion US dollars. All debts to the World Bank, the International Monetary Fund and the African Development Bank can be canceled. The prerequisite for this are strict criteria, especially in the area of good governance . 18 countries, mainly in Africa south of the Sahara , benefitting immediately - they were issued 40 billion dollars in liabilities. Nine more can still qualify in the next few months. The other ten HIPC could be added later.
See also
- Portal: development cooperation
- Agriculture in Developing Countries
- New world economic order
- Lomé Convention
- Adapted technology
literature
Global finance and human development. , A study by the expert group “World Economy and Social Ethics”, ed. by the Scientific Working Group for Universal Church Tasks of the German Bishops' Conference (Bonn, December 2001)