Economics Developing World Term Paper

Length: 4 pages Sources: 3 Subject: Economics Type: Term Paper Paper: #97220565 Related Topics: Economic Recession, Economics, Nigeria, Finance Economics
Excerpt from Term Paper :


The condition of global financial stability implies that the world's financial institutions are healthy, that macroeconomic risks are within normal bounds and that the risk environment including appetite for risk is at normal levels (IMF, 2014). There are differences between the ways that the macroeconomic environment affects the developed and developing worlds, and this paper is going to focus on the latter. The economic structure and vulnerability levels of the developing world, as well as their often-reduced participation in the global economic system create different reactions to the condition of global financial stability.

Global financial stability as a condition is fostered by the economic health and stability of the world's largest and most interconnected economies. The European Union, United States, Japan and other modern nations contribute to the prevailing conditions in the global macroeconomic environment. These economies tend to be highly interconnected. For example, when issues emerged in U.S. credit markets in 2008, much of the Western world was dragged into recession along with the U.S., except those nations with strict capital controls in their banking system, but even they saw slowdown. The developing world was affected in different ways. Some developing world nations are highly connected to the major Western economies -- for example 78% of Mexican exports go to the United States -- and therefore their economic performance is more correlated with global financial stability. Other nations have strength of their own, and trade networks that go beyond mere dependence on the West. China saw a slight slump in 2009 but almost immediately began a recovery. Still other nations in the developing world were barely affected at all -- many African nations were not really affected because they are not part of the global economic system. Other nations have reference interest rates, healthy credit markets, and health aggregate demand. When the global financial system is unstable, interest rates might drop as a point of monetary policy, but a flight to quality could raise rates in the developing world. Credit markets could dry up, and aggregate demand is likely to fall. As noted, how much the latter matters depends on the level of dependence of the emerging market in question. But credit markets matter because they facilitate trade -- if buyers cannot finance their purchases, the seller suffers. Mexico, being highly dependent on the U.S., saw its GDP collapse in 2010 as the result of global financial instability (Trading Economics, 2014). Malawi, far removed from the global financial system, saw no such decline relating to the Great Recession (Ibid). So for countries with close ties to the global economic system -- many are dependent on North American and European trade -- their exports and trade are expected to fall during times of global financial instability and rise during times of global financial stability; countries far removed from the financial system are unlikely to see these effects.

Foreign Direct Investment

Whatever the net effect on their economy might accrue from…

Sources Used in Documents:


Els, F. (2014). Mongolia foreign investment craters 70%. Retrieved November 15, 2014 from

IMF. (2014). October 2014 Global Financial Stability Report. International Monetary Fund. Retrieved November 15, 2014 from

Lange, J. (2010). Mexico sees 2010 FDI bouncing back. Reuters. Retrieved November 15, 2014 from

Reuters. (2014). Mexico saw record $35 billion in foreign direct investment in 2013. Reuters. Retrieved November 15, 2014 from
Trading Economics. (2014). Mexico GDP. Trading Economics. Retrieved November 15, 2014 from
Trading Economics. (2014). Malawi GDP. Trading Economics. Retrieved November 15, 2014 from
Vanguard. (2011). Nigeria FDI falls to $2.3 bn in 2010, says UN. Vanguard. Retrieved November 15, 2014 from

Cite this Document:

"Economics Developing World" (2014, November 15) Retrieved January 16, 2022, from

"Economics Developing World" 15 November 2014. Web.16 January. 2022. <>

"Economics Developing World", 15 November 2014, Accessed.16 January. 2022,

Related Documents
World Bank-Role in Avoiding Economic Crisis World
Words: 1913 Length: 6 Pages Topic: Economics Paper #: 27361898

World Bank-Role in Avoiding Economic Crisis World Bank and Economic Crisis World Bank: How necessary is World Bank in avoiding an economic crisis? Increased capital flows and economic crisis Leveraging the liquidity of developed countries Global Financial Development Report 2013 (GFDR) World Bank: How necessary is World Bank in avoiding an economic crisis? As a result of Bretton Woods's conference, the World Bank (WB) was created in 1944. The most influential role in the establishment of WB

WTO the Developing World and the World
Words: 2486 Length: 8 Pages Topic: Economics Paper #: 91222659

WTO The Developing World and the World Trade Organization The World Trade Organization (WTO) was established as an international organization in 1995 as a successor of the General Agreement on Tariffs and Trade (GATT) ("World Trade Organization" 2009). The negotiations that extended for seven years, also known as Uruguay Round gave birth to WTO with vastly stretched out responsibilities for handling and running the economic affairs on an international level. Since then,

WTO and Developing World Trade Organization Currently
Words: 2371 Length: 8 Pages Topic: Economics Paper #: 62295487

WTO and Developing World World Trade Organization currently does not have a clear definition of a developing country. For this paper, we need to know what a developing country is in order to see if accession to WTO actually improves their economic situation and to see if they are treated fairly by the organization and its wealthier members. But we need to understand that since there is no clear definition of

Reforming the Developing World
Words: 974 Length: 3 Pages Topic: Economics Paper #: 23404759

AFRICA good afternoon, attachment. Reference material attached. Africa: Public finance and legislative procedures Financially-strapped African nations must make difficult choices when calculating the opportunity costs of different decisions they must make regarding financing. The goals of this hypothetical African nation are to encourage personal savings on the part of citizens but also to encourage foreign investment. One of the suggested reforms has been to institute a property tax. While property taxes have been

Women in the Developing World Third World Countries
Words: 699 Length: 2 Pages Topic: Sports - Women Paper #: 97075926

Women in the Developing World When one goes back in time we see that women have always been the target of the male gender. They have tried to control their thoughts, actions and feelings. Their opinions and ideas have not mattered and to the male gender, women were nothing but an object of pleasure and were considered to be their possession. With time the civilized part of the world realized that

Women and Econ Develop Sometimes
Words: 994 Length: 3 Pages Topic: Sports - Women Paper #: 38821183

The women's work, therefore, continues to be arduous and tedious, potential productivity, unrealized and quality of life is substandard. According to Jehan, for example, solutions to bettering this situation include enhancing data on women's economic participation and increasing the proportion of women in education, rural incomes and productivity. In India, for instance, a number of economic initiatives have been undertaken in regard to the role and status of women. These