Abstract:
In a modern economy,there is
distinction between the surplus
economic units and the deficit economic units and in consequence a
separation of the savings investment mechanism.This has necessitated the
existence of financial institution whose jobs include the transfer of funds
from savers to investors.It is generally expected that developing countries,
facing a scarcity of capital, will acquire external debt to supplement
domestic saving. However, whether or not external debt would be
beneficial to the
borrowing nation depends on whether the borrowed money is used in the
productive segments of the economy or for consumption.
