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UNU-WIDER The Financial Crisis of 2008 and the Developing Countries

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A teenager wears torn rubber boots in a muddy local market in Bac Ha, Viet Nam. As of 2005 figures, half the world population—more than 3 billion people–is estimated to live on less than USD 2.50 a day. Bac Ha, Viet Nam. UN Photo/Kibae Park.

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The Financial Crisis of 2008 and the Developing Countries

Following the financial crisis that broke in the US and other Western economies in late 2008, there is now serious concern about its impact on the developing countries. The world media almost daily reports scenarios of gloom and doom, with many predicting a deep global recession. This paper critically discusses this and concludes that as far as the developing countries are concerned, a bit more optimism may be warranted. Although without doubt there are particular countries that will be adversely affected, there will also be countries that may be less affected, may avoid recession, and may recover sooner than expected. Six major reasons for this conclusion are discussed. Without this resilience in the developing world, prospects for the world’s richer countries would be much bleaker. Finally, some options available to the developing countries for minimizing the impact of the crisis are discussed. The crisis accentuates the urgent need for accelerating financial development in developing countries, both through domestic financial deepening, domestic resource mobilization, and reform of the international financial system.
Publisher:
UNU-WIDER
Series:
WIDER Discussion Paper
Volume:
2009/01
Title:
The Financial Crisis of 2008 and the Developing Countries
Authors:
Wim Naudé
Publication date:
January 2009
ISBN 13 Print:
9789292301705
ISBN 13 Web:
9789292301712
Copyright holder:
© UNU-WIDER
Copyright year:
2009
Keywords:
financial crisis, developing countries, development finance, financial development
JEL:
F34, F35, G14, O16
Project:
New Directions in Development Economics (2008)
Sponsor:
UNU-WIDER acknowledges the financial contributions to the research programme by the governments of Denmark (Royal Ministry of Foreign Affairs), Finland (Ministry for Foreign Affairs), Sweden (Swedish International Development Cooperation Agency—Sida) and the United Kingdom (Department for International Development).
Format:
online and printed copies

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