Neoliberal Finance Undermines Poor Countries ’ Recovery

By Anis Chowdhury and Jomo Kwame SundaramSYDNEY and KUALA LUMPUR, Mar 2 2021 (IPS) After being undermined by decades of financial liberalisation, developing countries now are not only victims of vaccine imperialism, but also cannot count on much financial support as their COVID-19 recessions drag on due to global vaccine apartheid. Anis ChowdhuryFinancialisation undermined South Developing countries have long been pressured to liberalise finance by the International Monetary Fund (IMF) and the World Bank. The international financial institutions claimed this would bring net capital inflows. This was supposed to reduce foreign exchange constraints to accelerating growth, creating “a rosy scenario, indeed”. Globalisation’s claim naively expects “more birds to fly into, rather than out of an open birdcage”. Instead, financial globalisation meant net capital flows from capital-poor developing countries to capital-rich developed countries, i.e., dubbed the “Lucas paradox”. A decade later, flows “uphill” had “intensified over time”. The past decade saw the largest, fastest and most broad-based foreign debt increase in these economies in half a century. Total foreign debt of emerging market economies rose from around 110% of GDP in 2010 to more than 170% in 2019, while that of low-income countries (LICs) increased from 48% to 67%. Pandemic woes Developing countries saw private finance drop by US$700 billion in 2020, while foreign direct investment flows to d...
Source: IPS Inter Press Service - Health - Category: International Medicine & Public Health Authors: Tags: Development & Aid Economy & Trade Financial Crisis Global Globalisation Headlines Health Humanitarian Emergencies TerraViva United Nations Source Type: news