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International Trade and Finance

Notes 2. External Indebtedness : External debt (or foreign debt) is that part of the total debt in a country
that is owed to creditors outside the country. The debtors can be the
government, corporations or private households. The debt includes
money owed to private commercial banks, other governments, or
international financial institutions such as the International Monetary
Fund (IMF) and World Bank. Note that the use of gross liability figures
greatly distorts the ratio for countries which contain major money
centers, e.g. United Kingdom, because of London's role as a major
money centre. Contrast Net international investment position
28.6 Review Questions

1. How will defaults lead to another Great Depression?
2. Write a short note on the indebtedness of Developing Countries.
3. How do LDCs meet debt service obligations?
Answers: Self-Assessment
1. (i)(b) (ii)(d) (iii)(c) (iv)(a)
28.7 Further Readings

1. Krimawati, Wawat. (?) NAFTA: North America Free Trade Agreement. [Accessed
18 May 2009]
2. Vogel, David. (2009) North American Free Trade Agreement. [Accessed 18 May
2009] 2009. North American Free Trade Agreement (NAFTA).
3. United States Department of Agriculture, Foreign Agricultural Service. [Accessed
June 8, 2009]

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