Bretton Woods Institutions

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Third World Countries have been the focus of technical and financial aid from the Bretton Woods institutions for a very long time. However, to date mixed thoughts and views have ran through the minds of various scholars and policy makers as regards to the role that foreign aid in particular from the IMF and the World Bank plays in the development process of LDCs. This has mostly been attributed to the high poverty levels, the rampant unemployment and generally the underdeveloped nature of these economies despite being recipients of aid. It is from this brief background that the thesis of this essay seeks to critically analyse whether the Bretton Woods institutions have been the major perpetrators of this underdevelopment in LDCs with examples drawn from the Zambian context. In order to comprehensively address this topic, the essay will begin by briefly defining the major operational concept which is foreign aid, after which it will briefly look at the major factors that caused LDCs to seek aid from the Bretton Woods institutions. Thereafter the essay will critically analyse the positive and negative impacts of these institutions by citing examples from the Zambian context. Lastly, the essay will conclude by giving a brief summary of the discussion. According to Burnell (1997), foreign aid is the resource transfer from one country (usually a developed country) to another (usually a less developed one) provided it is non commercial from the donor’s point of view, and is characterised by concessional terms such as low interest rates and longer repayment periods. Foreign aid is also known as Official Development Assistance since it originates from official sources be it governmental or multilateral. Since the 1980s, a debt crisis hit the world especially developing countries. This debt crisis has its origin in the early 1970s when oil-producing countries that had united in the Organisation of Petroleum Exporting Countries (OPEC) increased the oil price to gain...
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