Business Standard

Democratising debt

Emerging economies must take stronger action to address risk mispricing, a problem at the heart of financing economic transformation

developing nations, developed economies, countries

Illustration by Binay Sinha

Rathin Roy
The contemporary problem of financing economic transformation is simple. Rich, ageing populations in developed countries should be investing in poor countries that have a young workforce capable of generating higher returns to capital. If markets work, finance should flow from rich countries to poor countries.

This does not happen. The rich view poor geographies as “risky” places to do business. Hence, the international financial architecture imposes “sector” and “country” limits on such financial flows. Per capita income of a country has the largest weight in a country’s risk rating — the poorer you are, the less money you get. At the
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Jun 22 2023 | 9:45 PM IST

Explore News

To read the full story, subscribe to BS Premium now, at just Rs 249/ month.

Key stories on are available only to BS Premium subscribers.

Register to