The Nations with the Highest Borrowings Per C...

The Nations with the Highest Borrowings Per Capita and Implications

Author Name : Sarika Pansare, Pooja Patil, Parth Mehta

ABSTRACT

A nations' borrowing per capita can also be explained as debt to GDP ratio; this means that it's the country's dues compared to its economic yield, i.e., once the nations' economy slows down, the Government borrows to keep up its commitments and to rouse its economy. Both developed and developing countries borrow for investment projects that they cannot finance themselves, and most borrow from international credit markets based on their credibility to pay back the borrowed amount. In conclusion, this review has observed that Japan leads the nations among borrowing per capita at 236%, and Brunei is the lowest at two percent. The difference is that the poorer economies have to borrow in international currencies like the US dollar, and despite a good export of their products abroad, they still collect large external debts as compared to rich economies like the US. External debt is the main factor that destabilizes the capital flow into the country. The implications of a high debt by the Government in higher interest rates, inflation, and higher taxes have been briefly explained.

Keywords: Borrowing, Financial, Per capita