Unit 9 Lecture

This lecture discusses the role of international financial institutions in developing economies, presenting a perspective on international lending practices. It presents a hypothesis about how international financial institutions interact with developing economies through lending and development strategies. It characterizes these institutions as centralized economic planning and critiques them along those lines. Before watching this video, it is important to reflect upon the fact that money creation by international financial institutions does not impose an opportunity cost on the entities responsible for its issuance. These institutions lend money they create without incurring any associated opportunity cost. However, the repercussions of this practice are borne by the borrowers themselves. As they become entangled in the pitfalls of central planning, these projects tend to falter, leading to an inability to repay the borrowed funds. The proposed solution for developing countries caught in this cycle is often to borrow even more dollars, which perpetuates further centralization and deepens the borrower's political dependency. This unit aims to provide students with an understanding of the effects of a debt-based and centrally planned economy on the populations of the global south. It emphasizes the importance of exploring alternatives that promote economic growth, such as an economy founded on capital accumulation through saving and the adoption of free market principles. By examining these contrasting approaches, students can gain insights into the potential benefits of alternative economic models for the well-being of communities in the global south.