A Point:
"Africa is not one country" is a phrase I hear all the time (though I admit that may not be as universal an experience). And it's true. Africa is a continent with a wide array of countries with widely different cultural, economic, political, ext. assets, challenges, and situations. Looking at Africa as if it's all the same is just silly.
From the Krugman (The Return of Depression Economics) and Stiglitz it seems clear that major problem for LDCs in debt markets is the tendency for lenders to view them as all one. Over and over again we find examples of regions or even all emerging markets being subjected to massive pullouts of investment and recall of loans (to name a few things) because a different LDC is having a problem or made a bad decision. When Mexico handled devalued its currency (and arguably botched the it) Argentina was devastated and investment in all of Latin America was affected. The panic in the Asian markets made lenders wary of al lending to LDCs anywhere. For all there is to be said of regional linkages and markets, it seems that the global lending markets suffers from a case of "Less Developed Countries are all the same/one country". In a lending market that is highly susceptible to speculation and "animal spirits" as we discussed in class this kind of mistaken assumption that if LDCs in one country or region are making bad (or good) financial decisions or in bad (or good) economic situations that all LDCs are a risk (or good investment).
Some Thoughts:
From our readings it is clear there are many differences between personal and international/sovereign lending. However would it not solve at least a chunk of the problems that Stiglitz is so crazy about to practice fixed rate loans on the international scale? Especially with the long time period of such large loans this seems more stable and practical.
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