Cultural Models of International Borrowing

Abstract

International insolvency has reached a very serious level not only for developing countries but also for the financial institutions in creditor countries. We must realize that two basic assumptions of economics do not hold in some of the countries. They are: (1) investment for return; and (2) money as a universal instrument of transactions. Instead of them, other cultural principles are at work which are amplified and maintained by causal loops long after their historical origins have disappeared.