Question

Which of the following groups makes long-term low-interest loans to less- developed countries \((\mathrm{LDCs}) ?\) a. Agency for International Development (AID) b. New International Economic Order (NIEO) c. International Monetary Fund (IMF) d. World Bank

Short answer

The correct answer is \(d. \text{World Bank}\), as it provides long-term low-interest loans to less-developed countries (LDCs) to support economic development and reduce poverty.

Step-by-step solution

Agency for International Development (AID)

The Agency for International Development (AID) is a United States government agency responsible for administering civilian foreign aid and assistance to foreign countries. While AID does provide some financial assistance to LDCs, its primary focus is on humanitarian aid, disaster relief, and technical assistance, rather than long-term low-interest loans.

New International Economic Order (NIEO)

The New International Economic Order (NIEO) was a term used in the 1970s to describe a set of proposals put forward by developing countries to promote their interests within the global economy. The NIEO included demands for debt relief, technology transfer, and a restructuring of the international trade system. However, the NIEO was not an organization or institution, so it does not provide financial assistance.

International Monetary Fund (IMF)

The International Monetary Fund (IMF) is an international financial institution that aims to foster global monetary cooperation, secure financial stability, facilitate international trade, and reduce poverty. It mainly provides short-term financing and technical assistance to help countries overcome balance of payment problems. While it does offer financial resources to LDCs, its focus is not on providing long-term low-interest loans.

World Bank

The World Bank is an international financial institution that provides long-term financing and technical assistance to support economic development in countries around the globe. Its main goal is to reduce poverty and promote sustainable economic growth in developing countries. The World Bank is known for providing long-term low-interest loans to less-developed countries, making it the organization that matches the desired characteristic. In conclusion, the correct answer is: d. World Bank

Key concepts

World Bank loans

The World Bank plays a crucial role in providing financial support to foster economic progress in less-developed countries (LDCs). Simply put, it serves as an international financier for development projects that aim to alleviate poverty and enhance living standards. World Bank loans are famous for their long-term maturity and low-interest rates, features imperative for LDCs that struggle to attract capital with agreeable terms.

Vital projects that benefit from these loans include infrastructure development like roads and schools, health initiatives, and environmental preservation. The World Bank's funding comes with technical expertise and policy advice to ensure the successful implementation of these ventures. It's important to understand that these loans are not merely financial transactions; they are tools to enable transformative change in LDCs, ensuring sustainable economic growth and development.

Less-developed countries assistance

Assistance to less-developed countries goes beyond just financial help. It's an encompassing approach which includes providing access to education, healthcare, and technological advancement, along with the necessary monetary support. Organizations, both governmental and non-governmental, work together to design assistance programs which propel LDCs towards self-reliance and prosperity.

Key elements of such assistance often take the form of grants, technical assistance, and capacity-building initiatives. Assistance programs focus on various sectors like agriculture, industry, and service to diversify economies and reduce dependency on a limited number of exports.

Empowering Local Communities

Specifically, assistance is aimed at empowering local communities by enhancing their skills and capabilities to manage and sustain development projects. This ensures that the gains from these projects are long-lasting and can stimulate further developments organically within these countries.

Global economic cooperation

Global economic cooperation is the cornerstone of modern international development. By fostering collaborations among countries, international organizations, and various stakeholders, we can address cross-border challenges such as poverty, climate change, and economic instability. Cooperation involves coordinated policies, shared knowledge, and joint efforts, which can be far more effective than isolated actions.

Advantages of Cooperation

The advantages include the pooling of resources, harmonization of standards, and exchange of expertise, all of which can have a positive ripple effect on the global economy. A functional example of this cooperation is the Group of Twenty (G20), a forum of the world's major economies working together to discuss and promote international financial stability. By aligning on principles and actions, global economic cooperation reduces the risks of economic crises and helps in the efficient allocation of resources to areas where they are most needed.