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EconDebates Online

EconDebates Online keeps you informed on today's most crucial economics policy debates. Each EconDebate, created by John Kane (SUNY-Oswego), provides a primer on the issues and links to background information and current, in-depth commentaries from experts around the world. Review the brief introductions and, for EconDebates of interest, select the full debate.

International Finance



Does dollarization benefit developing countries?

Full Debate 

Technological advances allow society to produce more output from the existing mix of resources. These advances may take the form of less costly methods of producing existing output or may result in the production of new (or substantially improved) commodities (such as DVD players, HDTV, anti-lock braking systems, and similar innovations). Society clearly gains from the production of either more output or more highly valued output. But, how do these technological advances affect employment?

Does foreign direct investment hinder or help economic development?

Full Debate 

One of the requirements for economic development in a low-income economy is an increase in the nation's stock of capital. A developing nation may increase the amount of capital in the domestic economy by encouraging foreign direct investment (FDI). (Foreign direct investment occurs when foreign firms either locate production plants in the domestic economy or acquire a substantial ownership position in a domestic firm.)

What are the pros and cons of IMF involvement with global economies?

Full Debate 

A new international monetary system was adopted as a result of the Bretton Woods conference of 1944. Under this new monetary system, the value of the U.S. dollar was fixed in terms of gold and all other currencies were assigned exchange values in terms of either gold or the U.S. dollar. The U.S. agreed to maintain the value of the dollar at $35 per ounce of gold; other countries agreed to maintain the exchange value of their currencies within one percent of the target exchange rates. Under this system, countries could alter their exchange rates only with the consent of the other IMF members.

Will the European Monetary Union succeed?

Full Debate 

Most of the countries in Europe are participating in a bold economic experiment in which national currencies will be replaced by a common currency (called the Euro) by the year 2002. In May 1998, decisions were made on which countries were eligible for participation in the European Monetary Union. A European Central Bank was created in 1998 that is charged with coordinating monetary policy for the EU. Since January 1, 1999, the Euro has been used for all foreign exchange operations in the participating countries. Euro banknotes and coins will begin to circulate on January 1, 2002 and will completely replace national currencies by July 1, 2002 (existing national currencies will cease to be legal tender in the participating countries on or before this date).

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