Brave New World Study resource
Added on - 26 Nov 2019
Brave New World1Brave New WorldNegotiation Social Change(Question 3: International Debt and Inequality)
BRAVE NEW WORLD2Discussions around international debt and its contribution to global inequality is wide. Friedman& Friedman (2008) explain that globalization has pros and cons highlighted in socialcontradictions that exist within its functions. International debt is at the heart of globalization asnational governments or international institutions exchange money given as loans for publicinterests. The bilateral and multilateral relations lead to debts as governments borrow moneyfrom external sources for development, or commerce. However, in most cases, the amountborrowed does not show positive social change[ CITATION Fri08 \l 1033 ].Sometimes the debtbecomes unsustainable and unmanageable for generations after. Debts have direct and indirectconsequences on a nation at large. Though meant for good, a number of researchers’ identifyeconomic gaps created by deficits in economies whose debt is high. Although countries accruedebt for economic activities, its liabilities such as the increased interests and outstandingamounts become high reshaping the civilization process[CITATION Woo11 \l 1033 ].Often, debtchallenges political freedom, social benefits, economic and social rights[ CITATION Jon13 \l1033 ].Debt has a negative effect on economic out (Tsounta, et al., 2015). The national debt affects thepublic as much as private credit affects social security. Some of the elements to watch out forinclude the GDP ratio, export factors, increased poverty, fiscal revenue and structural limitations.Foreign debt affects income share levels, increases poverty rates and impedes trade. Thesedepend on the type of debt for long term and short term borrowings. There are many factorsinfluencing the debt gap. Among them is the loss of money through wastage of debt finances.This is common in developing nations where corruption is high[ CITATION Kim17 \l 1033 ].
BRAVE NEW WORLD3The justice movement believes that debt causes economic anarchy because of increasedinequalities.Third world nations have massive unpaid debts because the interest debt is too high. This affectsthe country’s GDP, which is the country’s market value of goods and services. It leads tochanges in income shares. A low GDP implies that the people’s living standards are also low.High debts reduce the aggregate demands and macroeconomic factors[ CITATION Che12 \l1033 ].This reduces their buying power and hence the monetary value of goods and services.Hawkins (2014) points at globalization and the social aspects to highlight the impact ofstructures on the contemporary society. He discuses migration and the impact of resettlments onindigeneous groups. A government, which borrows money from the IMF in order to develop itsagricultural industry, may fail to implement strategies to pay back the money efficiently. Thisaffects poor people who depend on agriculture for sustenance[ CITATION Lau14 \l 1033 ].It isimportant to consider the rate of GDP output from the sector of investment. It is futile to use aloan in a sector whose GDP output is low unless there are proven strategies in place. Whenpeople in a country are unable to purchase things, it means their economic activities is low.Countries that lend remain at an advantage because they can afford the cost of supplies. Poorinvestment options lead to poor borrowing choices such as using the money for current expensesExports are investment causes inequality when multinational corporation’s sets up industries inareas where labour is cheap yet fail to improve the living standards of the locals. India and Chinaare examples of places where the government has had to make reforms in order to ensure that its