What is "Third World Debt"?

Question

Come to think of it, what is "The Third World"?

Answer 1

Third World is a term first coined in 1952 by French demographer Alfred Sauvy to distinguish nations that aligned themselves with neither the West nor with the Soviet Bloc during the Cold War. Today, however, the term is frequently used to denote nations with a low UN Human Development Index (HDI), independent of their political status (meaning that the PRC, Russia and Brazil, all of which were very strongly aligned during the Cold War, are often termed third world). However, there is no objective definition of Third World or "Third World country" and the use of the term remains common. Some in academia see it as being out of date, colonialist, othering and inaccurate; its use has continued, however [1] In general, Third World countries are not as industrialized or technologically advanced as OECD countries, and therefore in academia, the more politically correct term to use is "developing nation".

Third World debt is external debt incurred by Third World countries (the term "Third World" is still in use, although many prefer less pejorative terms, such as "developing countries", "Majority World" or "global South"). Unpayable debt is a term used to describe external debt where the interest on the debt exceeds the amount that the country produces, thus preventing the debt ever being paid back. It is considered by some a method of oppression or control by first world countries; a form of debt bondage on the scale of nations.

Odious debt is debt incurred by undemocratic countries and misspent (for example, on armaments or repression of the population) or misappropriated. The debt campaign organization, Jubilee USA notes that, "Odious debt is an established legal principle. Legally, odious debt is debt that resulted from loans to an illegitimate or dictatorial government that used the money to oppress the people or for personal purposes. Moreover, in cases where borrowed money was used in ways contrary to the people’s interest, with the knowledge of the creditors, the creditors may be said to have committed a hostile act against the people. They cannot legitimately expect repayment of such debts." (PDF)

Debt also occurred during the 1973 oil crisis when the western members of OPEC pushed the price of oil up making the Arab nations very wealthy. They decided to deposit this money in large Western banks. The banks didn't want all of this money lying around so it was leant to the third world countries. Debt then ensued.

One argument that exists states that "odious debt" should be cancelled at the expense of the creditors, according to the argument that those who suffer from the consequences of spending should not have to repay the money they never controlled. Additional arguments against creditors state that these funds were loaned irresponsibly in the first place. However major recent examples, such as with the Apartheid government of South Africa and the Mobutu dictatorship in Zaire (now the Democratic Republic of Congo) have not been recognized by creditors as "odious".

Answer 2

Third world debt has long been recognized as a major obstacle to human development. Many other problems have arisen because of the enormous debt that third world countries owe to rich countries. Debt has impeded sustainable human development, security and political or economic stability.

It's basically when poor countries owe rich countries money.

The " third world" is any poor country.