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Developing Countries Responded To Debt Essay

The states which had a diversified palette of export products managed to overcome the crisis in relatively short periods of time due to the advantages of diversification. But the countries which had smaller economies, strictly dependent on one or two export products faced more challenges in defeating the crisis. These countries include Honduras, El Salvador, Nicaragua, Uruguay, Panama and Paraguay (LaRosa, Mejia, 2006). All in all, the approaches implemented by each country in the management of the Great Depression of the 1930s revealed both differences as well as similarities. The differences included diverse policy approaches, monetary decisions and the capitalization on the export advantages. The differences in the approach of the depression were given by a multitude of issues, most of them derived from the country-specific features. For instance, China, due to its currency pegging to the silver rather than the gold, faced little impediments in revival. The countries in Europe renounced their currency pegging to the gold and the countries in Latin America based their revival on export strategies. The actual success in overcoming the crisis was directly linked to the national strengths and weaknesses of each developing state.

As the global leaders met at Bretton Woods and formed the International Monetary Fund and the International Bank of Reconstruction and Development, the management of the debt crises moved on to a new level. The developing countries gained access to more funds and expertise to help them overcome the crises.

While the general approach became more integrated due to...

In the democartic countries for instance, which had elected leaders, the international funds were used in a more transparent manner, whereas in the cases of states with abusive and self declared leaders, the funds were spent in less sensible manners (Vandaele, 2007).
Also, the institutions created by the Bretton Woods produced a series of complexities in the economic revival of the developing countries. Decisions were mostly influenced by the developed states; the relationship with the Bretton Woods institutions was rigid; the policies implemented worsened poverty in the countries and the rich countries were often the beneficiaries of the policies (Vandaele, 2007).

Sources used in this document:
References:

Bernanke, B.S., Money, gold and the Great Depression, Federal Reserve, http://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm last accessed on November 3, 2011

LaRosa, M.J., Mejia, G.R., 2006, An atlas and survey of Latin American history, M.E. Sharpe

Robinson, J.A., 2009, Good crises? Implications for developing countries Harvard University, http://scholar.harvard.edu/jrobinson/files/jr_wb_goodcrises.pdf last accessed on November 3, 2011

Saint-Etienne, C., 1984, The Great Depression, 19229-1938: Lessons for the 1980s, Hoover Press
Vandaelee, J., 2007, Bretton Woods II: New lifeline for ailing giants, IPS News, http://ipsnews.net/news.asp?idnews=44469 last accessed on November 3, 2011
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