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Financial Crisis Essay

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Every country has its ups and downs, unfortunately, countries having to deal with financial problems which tend to cause a tremendous effect on the nation as a whole. Financial crisis plays a huge role in countries going into a recession, and being unable to meet the demand for money. Sadly, developing countries are facing financial crisis the hardest, for example, countries such as Haiti, South Africa, and Afghanistan are just some of the countries who have trouble with financial issues for decades. Furthermore, developing countries are more than likely to face financial crisis due to not making enough trades, which depends on the amount of income that comes in and out of countries. Today, financial crisis has gotten worse in many developing…show more content…
Due to developing countries not being able to make any trades, countries then begin to see a dramatic change in the economy. The article “The Financial and Economic Crisis and Developing Countries” by Bruno Gurtner, explained the main causes of why developing countries are still going through the financial crisis phase. Bruno Gurtner simply states, “the crisis was transmitted primarily by trade and financial flows forcing millions back into poverty” (Gurtner, 2008). However, Gurtner discovered, since the financial crisis has been hitting developing countries hard, it begins to cause a regression in economic growth in those poor countries. Gurtner found that “Marco-economically the crisis manifested…in trade and payment balances, dwindling currency reserves, currency devaluations, increasing rates of inflation, higher indebtedness and soaring public budget deficits” (Gurtner, 2008). Although, Gurtner have his own beliefs about how the financial crisis effects the developing countries, however, in the article “Financial Crises: Explanations, Types, and Implications” Stijn Claessens and Ayhan Kose have different beliefs about financial crisis and developing countries. Claessens and Kose simply explain “financial crisis is often associated with…substantial changes in credit volume and asset prices; severe disruptions in financial intermediation and the supply of external financing to various actors in the…show more content…
With those two personalities, citizens and the country itself to go through multiple problems throughout the financial crisis. In the article “The Global Financial Crisis and Developing Countries” Dick Willen te Velde discusses the different types of social effects and how the financial crisis impacts the economy. For example, Velde states, “the economic impacts could include weaker export revenues, further pressures on current accounts and balance of payment, lower investments and growth rates, and lost employment” (Velde, 2008). In addition, Velde also covers the social effects citizens’ face while going through the financial crisis. Velde clearly states, “there could be the social effects….. lower growth translating into higher poverty, more crime, weaker health systems and even more difficulties meeting the Millennium Development Goals” (Velde, 2008). However, Velde gives examples of countries who are not going through financial crisis are more than likely to be at risk the most for making trades with developing countries. For example, Velde states, “Countries with significant exports to crisis affected countries such as the USA and EU countries…Mexico is a good example as well…exporting products whose prices are affected or products with high income elasticities” (Velde, 2008). Although, other countries could be affected
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