SOC 300 Week 7 Discussion 08/17/2014
"International Finance" Please respond to the following: * Based on the lecture and Webtext materials, address the following: * The IMF and World Bank are the world’s two leading lending institutions, but much of their monetary assistance disappears once it enters the banking systems of developing countries. Cite concrete evidence that supports the assertion that much assistance to developing countries is simply stolen by officials. Determine other main factors that account for the misuse of these funds * The very resources that have been put in place to help developing countries in the long run have become a part of what is hurting them. The IFIs (International Financial Institutions), IMF (International Monetary Fund) and the World Bank were to prevent financial crises and to reestablish economies devastated by conflict. These lending institutions keep poor countries poor by keeping them in debt. When providing aid to the countries that are in need, because of government corruptions the money does not reach the people who need it. The money ends up in the hands of the corrupt through by moving money illegally into private accounts or banks that they own. The estimated amount that is stolen is in the billions. This causes banks in the developing world hesitant to lend money which results in those banks providing microcredit services where they give the poor who are in search of a loan a small amount and encouraged them to become entrepreneurs. When foreign money is invested a drop in interest rates causes money abroad to search higher yields causing a lot of investments and withdrawals. The World Bank concentrate on being a development bank where it provides loans instead of grants because IMF lending has not added much change financing for poor countries.

http://www.webtexts.com/courses/9808-linzie/traditional_book/chapters/983935-international-finance/pages/983480-what-keeps-countries-poor
http://assets.soomopublishing.com/courses/SocDev/IMF-World_Bank_Introduction.pdf