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07/11/2009

Why are poor nations poor (by Russell Roberts)

From Planet Money:

The planet's rich nations met this week to discuss, among other issues, ways to help the planet's poor nations.

But those poor (and developing) nations have their own group. It's called the anti-G20, in a nod to the G20 collection of industrialized states. The anti-G20 met at the U.N. last month, where Nobel Laureate Joseph Stiglitz and Martin Khor explained what keeps impoverished countries down. Answer: Their debt to the IMF and wealthier nations.

There are plenty of things rich countries do to make poor countries poor. Refuse to trade with them. Give the thugs who run the country money. But this IMF argument has always struck me as strange. The poor countries are poor because they IMF expects them to pay back the money that the poor countries borrowed? How do the loans get made in the first place? Don't the thugs who borrow the money bear some of the responsibility? How would forgiving those loans solve the problem?



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