Describe the political power cost of large capital flows into ...

[CORALGRILL2014]

Describe the political power cost of large capital flows into low-income countries.
 
  What will be an ideal response?

Question 2

A lender of last resort
 
  A) makes loans when no one else will.
  B) makes loans without regard for risk.
  C) is a firm that is forced to make loans for its own survival.
  D) makes loans to all who require them.

[akudia]

Answer to Question 1

The Odious Debt situation pointed out that among the lowest income countries, corruption and lack of freedom have been a problem in the debt crisis. Similar problems could result from non-debt capital inflows (although tax payers may not be left with the same kinds of IOUs with interest). Large inflows of capital give access to power that may be exploited on the side of those doing the investing (their gain as opposed to the host nation's) or by those with political power in the nation receiving it (the interests of the people in power as opposed to the nation's interests). Large bribes for favorable legal treatment, for example, may be in the interests of the policy makers and the firms, but not the people.

Answer to Question 2

A

[CORALGRILL2014]

Thank you

[akudia]

No problemo