Assertion (A): Developing countries are forced to borrow from Western commercial banks and private lending institutions.

Reason (R): Periodic debt crises in the developing world, lower incomes, and increased poverty are evident, especially in Africa and Latin America.

see full answer

Your Exam Success, Personally Taken Care Of

1:1 expert mentors customize learning to your strength and weaknesses – so you score higher in school , IIT JEE and NEET entrance exams.

An Intiative by Sri Chaitanya

Both (A) and (R) are true and (R) is the correct explanation of (A)

Both (A) and (R) are true and (R) is not the correct explanation of (A)

(A) is true, but (R) is false

(A) is false, but (R) is true

answer is A.

(Unlock A.I Detailed Solution for FREE)

Best Courses for You

JEE

NEET

Foundation JEE

Foundation NEET

CBSE

Detailed Solution

The developing countries are forced to borrow from Western commercial banks leading to debt crises.
Many countries were still under European colonial administration after the Second World War. Most colonies in Asia and Africa attained freedom, but it did not relieve these nations' poverty or resource shortages. Their economies and society suffered greatly from the long years of colonial rule. The World Bank and the International Monetary Fund were established to meet the financial needs of all nations. However, a change in the worldwide financial system in the 1970s forced developing countries to borrow from Western commercial banks and private finance firms. This change caused financial crises to reoccur, leading to rising unemployment and poverty in Latin America, Africa, and the industrialised world.
Hence, both the Assertion and Reason are true, and the Reason is the correct explanation of the Assertion.

Watch 3-min video & get full concept clarity