Question

. Describe alternative forms of capital inflow to finance external deficits and explain why these methods were used in different times? Discuss

3. Given your personal knowledge and impressions, do you think that technological progress will increase or decrease inequalities? Why? Discuss

Answer 1

The alternative sources of finance to finance external debt is:

• official lending : In official lending we can borrow from World Bank.
• bank finance: we can borrow from commercial banks.
• bond finance: where we can borrow form foreign citizens by selling our bonds to them,

They were used in different times because, banks can lend at rates which are below the market rates which allows the borrower to earn the market rate of return. when interest artes were low, bind financing was a ideal strategy to raise money so that lower interest would be paid to the bond holders.

3. Yes technology is creating inequality . Due to artificial intelligence, thousands of jobs at the banking sector alone is in fear of getting lost. The wave of automation is striking hard at the middle class people. Although it is believed that with Uber , more jobs are being crated but it has been found that Uber has been fined for misleading drivers about wages. Due to the advancement in bio hacking and gene editing , again due to this technology the elite classes will emerge as both physically and mentally strong.

Although it is believed that technology creates income disparity , as it is very easy to blame technology but it is how we distribute the benefits of wealth and income efficiency as determines the inequality .