Third World Debt

This is a brief history about the main causes of the Third World Debt in the many developing countries. 

First:   It all started after the Second World War, and the United States came up with the Marshall Plan to help Europe get back on its feet.  Soon after Europe became more stable, the United States and Europe became trading partners. There was lots of money circulating the world and the U.S. Government strongly encouraged the investment in countries overseas.  The United States began to do so to try to encourage development in those less fortunate countries.  The U.S. soon began giving loans to countries in the South (new African states and Latin America).

Second:  The 'Oil Crisis' of 1973 brought in much money that was then placed in Western Banks.  The banks soon there after loaned out money to the southern countries at low interest rates.  These loans make up the private part of the external debt of the Developing Countries.

Third:   The World Bank.  Under Robert MacNamara, the former U.S. Defence Secretary during the Vietnam War, the World Bank approved more loans during 1968-1973 than in the 23 years from 1945-1968. The World Bank tried to get the Developing Countries to borrow money to become more modernized and to allow them to be closer to the world market.  

Then somewhere in between 1968 and 1980, the debt in the Developing Countries multiplied 12 times over, going from $50 billion to over $600 billion.