1. World problems
  2. Excessive dependence on export credits

Excessive dependence on export credits

  • Export debt-credit crisis

Nature

While commercial credits play an important and useful role in world trade, excessive reliance on these credits may lead to debt-service crises.

Incidence

There are many instances in which developing countries have accepted suppliers' credits which were characterized not only by very short maturities and high nominal interest charges but also by substantial over-pricing of the goods supplied, so that extremely high effective interest charges were in fact incurred. It has been suggested, on the one hand, that developing countries ought not to accept suppliers' credits on such terms (notwithstanding the heavy pressures to do so where official aid is not forthcoming in sufficient quantity); and on the other hand, that the developed countries cannot legitimately escape responsibility for preventing the worst excesses involved in the system of commercial credits, especially since the primary object of such credits is not to aid developing countries but to encourage the marketing of exports.

Claim

Excessive dependence on export credits poses a grave threat to economic stability and growth. It fosters a culture of risk-taking among businesses, leading to unsustainable practices and potential financial crises. This reliance distorts market dynamics, undermines fair competition, and places undue burden on taxpayers. Moreover, it can stifle innovation, as companies become complacent, relying on government support rather than pursuing efficiency and creativity. We must urgently address this issue to safeguard our economy's future and promote sustainable development.This information has been generated by artificial intelligence.

Counter-claim

Excessive dependence on export credits is a manufactured concern that distracts from real economic issues. Export credits are vital tools that stimulate growth, support businesses, and enhance global competitiveness. Rather than viewing them as a problem, we should recognize their role in fostering innovation and job creation. Overemphasizing this issue undermines the benefits of international trade and the opportunities it brings. Let’s focus on leveraging export credits to drive prosperity, not demonizing them as a problem.This information has been generated by artificial intelligence.

Broader

Aggravates

Aggravated by

SDG

Sustainable Development Goal #9: Industry, Innovation and InfrastructureSustainable Development Goal #12: Responsible Consumption and Production

Metadata

Database
World problems
Type
(D) Detailed problems
Biological classification
N/A
Subject
  • Commerce » Credit
  • Commerce » Import, export
  • Societal problems » Dependence
  • Societal problems » Emergencies
  • Content quality
    Presentable
     Presentable
    Language
    English
    1A4N
    E0938
    DOCID
    11509380
    D7NID
    166437
    Last update
    Nov 4, 2022