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  1. 1

    Can debt relief boost growth in poor countries?

    Clements B; Bhattacharya R; Nguyen TQ

    Washington, D.C., International Monetary Fund, 2005 Apr. 13 p. (Economic Issues No. 34)

    Twenty-eight heavily indebted poor countries (HIPCs) were receiving debt relief under the HIPC Initiative by mid-2004, eight years after the Initiative was launched by the IMF and the World Bank and endorsed by governments around the world, and about four years after it was enhanced to provide more substantial and faster debt relief. The HIPC Initiative, the first coordinated effort by the international financial community to reduce the foreign debt of the world's poorest countries, was based on the theory that economic growth in these countries was being stifled by heavy debt burdens, making it virtually impossible for them to escape poverty. However, most of the empirical research to date on the effects of debt on growth has lumped together a diverse group of countries, including both emerging market and low-income countries; the literature focusing on the impact of debt on low-income countries (those with 2001 per capita gross national income of less than US$865) is scant. The paper on which this pamphlet is based, "External Debt, Public Investment, and Growth in Low-Income Countries" (IMF Working Paper No. 03/249, December 2003), addresses this gap in the literature. The paper also appeared as a chapter in a book published by the IMF in 2004, Helping Countries Develop: The Role of Fiscal Policy, edited by Sanjeev Gupta, Benedict Clements, and Gabriela Inchauste. It assesses empirically the effects of external debt on growth in low-income countries and analyzes the channels through which these effects are transmitted, giving special attention to the indirect effects of external debt on growth through its impact on public investment. Readers seeking a more detailed description of our analysis and of the literature on debt and growth are directed to the original working paper, which is available free of charge at Brenda Szittya prepared the text for this pamphlet. (excerpt)
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  2. 2
    Peer Reviewed

    The UN and ideational leaderships.

    Hveem H

    Forum for Development Studies. 2005; 32(1):275-283.

    The article takes as its point of departure the programmatic point developed in the introduction to Ahead of the Curve – that the UN’s role in producing ideas should be contextualised, that is be seen as not only the source of ideas, but the carrier of ideas originating in some other source. The author finds several of the contributions that he has been able to read very strong analytically and empirically. But on some issues a few of the contributions could have been addressing the programmatic point more consciously; one example is population policy. The author also argues that the position of the UN, for instance in the public opinion, is a matter that could have been addressed more extensively in order to measure the impact and the legitimacy of the world organization in a situation where major reorganization of it is on the international agenda. (author's)
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  3. 3

    Square pegs, round holes, and why you can't fight HIV / AIDS with monetarism.

    Rowden R

    Washington, D.C., ActionAid International USA, 2005 Mar. [4] p.

    How to get a square peg through a round hole? How can poor countries invest in the doctors, nurses, and teachers needed to meet the Millennium Development Goals (MDGs) when current International Monetary Fund (IMF) loan conditions limit the spending of recipient country governments? There is a fundamental contradiction between the need to greatly scale-up social spending to fight HIV/AIDS and what can actually be spent under the IMF’s current low-inflation monetary policy. How can significantly more money be spent in these economies without producing higher levels of inflation than the IMF’s low-inflation policy permits? In order for many poor countries to receive foreign aid from the World Bank or any of the rich countries, borrowing countries must first be given the “green light” by the IMF, an action that signals to other lenders that their national macroeconomic policies are sound. Because it opens the door to all the other major foreign aid donors and creditors, this “signaling effect” gives the IMF tremendous leverage over many aid-dependent countries in terms of the economic policy reforms it attaches as loan conditions. Unless a borrowing country is satisfactorily implementing the IMF’s preferred economic reform policies, it risks getting the “red light” – and being cut off from access to the major sources of foreign aid, credit, or debt relief programs. Of particular concern among the IMF’s binding loan conditions are economic policy reforms related to monetary policies (policies in which a central bank attempts to regulate the money supply and interest rates in order to control inflation and stabilize the currency). (excerpt)
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