Government Debt and Developing Countries

Debt seems to be a major focus of economists and ordinary citizens these days. With many of the worlds superpowers being burdened by increasing debt loads and expanding populations, developing countries must learn from the world’s mistakes in order to bring themselves better standing within the world. While many developing countries do not have the extreme debt situations of the United States or most of Europe, they still face the same questions that world superpowers wrangle over.

Developing countries have one primary catalyst for success, growth. Without growth, developing countries would have no ability to improve their general standing or made advances in the technological, health or educational realms. In order to sustain their growth and continue to have success, developing countries must form a balanced approach to debt, one that checks expenses and maximizes income.

Like any successful country, developing nations must serve their citizens well by creating jobs, providing quality education and healthcare as well as working to increase life spans, freedoms and wealth. While many developing countries are rich in natural resources such as oil, diamonds or agriculture, a lot of countries become hamstrung by tyrannical governments and suppression of individualism.

The current debt crisis that is affecting the world on a global scale has also created waves in many developing countries. Chile, the Philippines, Thailand and Indonesia all have significant debt loads when compared to their growth in GDP terms. Turkey and India have strayed away from heavy debt and are in considerably better financial shape than the rest of the world when comparing their total debt to their growth. The struggling developing nations have arrived at their breaking point due to a combination of ineffective government, crushing natural disasters, lack of educational opportunities and irresponsible lending.

The solution to these debt problems is not clear and will not be easy. For these developing countries to remain on a path of expansion instead of retraction, they must work with their citizenry to form open and effective governments that reign in spending and tighten lending while providing the best possible conditions for business and intellectual stimulation. Many developing countries have had tremendous job growth in the past few decades due to lower base wages and a large and hungry workforce that can now compete on a global level. While many of these jobs are considered to be gruelling and taxing, IT and manufacturing have been a major boon to many developing nations, bringing large quantities of jobs and strengthening trade deficits with major world superpowers such as the United States and Europe.

Much like the United States and Europe are doing currently, each developing nation should asses it’s current situation and strive to improve their overall fiscal outlook. With no country being immune to the world’s central problem of over extension in bank lending, many developing countries must be careful to ensure a stable banking system and a strong currency. Debasing currency to provide more money for wasteful spending can only dig developing countries into a deeper hole. Prudent and responsible governments that aim to serve their people before themselves will create the nations that have the largest growth prospects and happiest citizens in the coming years. While the world is undergoing a major shift from centralized wealth and production to a globalised marketplace, all countries more than ever have an effect on those many miles away.