Ideas to increase the funding for development

Written on January 12, 2007 by Max Oliva in Development

Jaime PM.jpg
Were very happy to welcome J.Pozuelo-Monfort contributions to this blog. He is MA in financial economics from Universidad Carlos III de Madrid, MSc in financial engineering from the University of California-Berkeley and is currently pursuing an MSc in economic development at the London School of Economics. He will be writing in regards to several subjects, focusing in the interaction between financial economics and economic development.
With DECEM: FINANCIAL ALTERNATIVES FOR DEVELOPMENT AID , Jaime starts a series of articles fundamentally innovative that aim at the proposal of alternative financial mechanisms to considerably raise the amount of funds available for development in the third world. Throughout the series of 10 articles, the author will stress the implementation aspects of the suggested ideas and will propose arguments for and against.
The world’s economic and financial system is articulated around a series of multilateral institutions that oftentimes set the direction of the economic policy at the national administration level. These institutions receive the name of Bretton Woods2 and their origin goes back in time towards the period just before the end of World War II in 1944. At the time the British economist John Maynard Keynes proposed the creation of institutions of global scope, able to contribute to the economic stability and progress of the nations of the world.
The well-defined role played by both the World Bank and the International Monetary Fund has, over the years, become less specific and oftentimes their intent, raison d’etre and goals partially overlap. Historically the World Bank has played a more notorious role against the extreme porverty of many nations, proposing economic policies that foster the growth and lending to sustainable development projects. However the International Monetary Fund proposes, grosso modo, austere macroeconomic policies to highly-endebted countries (external debt), so that the latter do not incur in fiscal deficits leading to the failure to service the debt owed to the first world, at the same time that it “rescues” countries in economic crisis from their bankruptcy situation, using abundant monetary resources with the condition of imposing ex-post (excessively) austere macroeconomic policies.
Continue reading Decem 01 Download file


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