ANTH 227 Lecture Notes - Eurodollar, Petrodollar Recycling, Capital Flight
21 Nov 2012
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Development theory, for infrastructure or stabilization, fdi from mncs to set up. Small amts of $, strict conditions, fixed interest rate. Wealthy ecos amass surplus $ - low price of oil stability. Period of buildup of eurodollars in west european banks. 1970s opec cartel decreases oil supply inc. in oil prices. Opec surplus $ is deposited in western banking sys. Some $ ends up in unregulated offshore banks. Western banks invest little in poorer countries (get concessional lending, Lender: charges borrow interest on a % of the outstanding loan each yr (private banks, public institutions, imf, world bank) Borrower: pays back part of $ borrowed, principle plus interest. Concessional lending: loans at below-market rates of interest or interest free loans & grants to poorer countries businesses doesn"t create debt. Debt crisis begins for exports from nics & lics (don"t need to import as do this demand on us$ us$ = stronger)
