Abstract
Abstract. The flow of foreign loans occupies a critical position in the economic development of the developing and under developed countries. Some writers view it in terms of the “dependency theory”, which states that foreign economic assistance is a tool through which the “center” exploits the “periphery” and so, the latter continues to remain undeveloped. Here, the center is donor and the periphery is the capital-receiving country. Less income levels, resources, inherited poverty, lack of good governance, political instability are some of the reasons for countries to inter into the trap of foreign loans. The article explains various definitions of foreign loans, its varieties and features. It examines into the needs which compels the countries go for foreign loans and also the donors, their characteristics and nature. Further it looks into the implications of foreign loan on the economy, social sector, agriculture, environment and politics of a country.
Keywords. Foreign loans, Debt, Development, Economy, Balance of payments, Donors, Social sector, Agriculture, Environment, Politics.
JEL. D02, D69, H81, F63.
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