Univesiti Utara Malaysia
FACULTY OF INTERNATIONAL STUDIES
International Political Economy
Individual Research Paper
Dr. Christopher Wylde
Arnold Garibaldi Soewondo
“All the Third World Debt Advanced by the Developed Countries should be Cancelled Immediately” Introduction
In the late of twentieth century, the worldwide has spread with the political and economic liberalism. There is no single country would be able to survive without being engaged with global economic system. The developing countries are encouraged to liberalize and open their market. A country which isolated from the global economic system would find itself in a difficult circumstance when it seeks to further its national economic development. This trade liberalization found that has widening the gap between rich and poor countries. As economic liberals produced economic growth, this growth encouraged the Third World countries to borrow money and remaining in debt. Many problems have arisen from the Third World debt toward developed countries, such as debt crises that often suffer the South countries.
World system theory characterizes with an unequal distribution of global wealth, economic dependence, and political inequality. It is made up of conflicting forces as each group seeks to gain advantage. This paper focused on the Third World debt that has been seen as serious problem to the Third World countries. The paper attempt to place this problem into theoretical perspective, with an emphasis on the arguments posited by structuralist dependency theory, which divided world between the core states or developed states (North) and the developing states (South) as a result of the changing geopolitics of an expanding world-economy. The Third World Debt
Decades after the Second World War, the world experienced tremendous growth in real incomes. Financial glows became more global in scope, the rapid industrialization and emerging markets of East Asia, Latin America, and elsewhere shifted global economic power and created an increasingly competitive international economy. All of countries in this world were encouraged to liberalize and open their market. Country which not liberalize and open their market would face an economic challenge that may hinder their economic development. The developed countries were encouraging the developing countries to open their market. However, this world capitalist system has brought a growing divisive inequality in social and economic terms. In the late of twentieth century, the world was confronted with new problem of globalization. The concept of globalization can be seen as integration and interaction of economic, social, and cultural processes among all states from the regional to the world level. But it was not progressed in a linear way or perhaps, it resulted in expansion of the developed power through international trade (foreign direct investment) and imperialism. The idea of imperialism is characterized by unequal relation of political, social, economic, and cultural not bound together by a common sense of identity, the world economy has become unstable structures that we can see in our world today. North has been the main market for Southern exports and the main source of Southern capital. Demand from the North for Southern export then will increase, in order to meet this demand the South countries and banks then borrowed heavily from the developed countries or international institutions. Many developing countries of this world have accumulated debt from various sources, such as international financial institutions and government. Suddenly, the economy of capital inflows to developing countries stops and with the world economy sagging, many of the developing countries have to faces a demand for the repayment of outstanding loans. These abrupt changes often led to financial crisis that suffered by the developing countries. The...
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