Private investors are often said not to pay attention to the actual risks of lending to emerging market economies, because IMF and World Bank will support countries with Balance of Payment problems. Romania is one of four countries in which official lending was made contingent on the implementation of related policy measures. The paper critically discusses the four cases and concludes that the application of these policies fell short of their goal. Based on the fact that poverty is largest and deepest in rural areas, the authors ask for the main causes and the policy factors that can move poor people out of poverty. As to the causes, the paper points to the vicious circle that developed in the rural area.
Poverty thus breeds poverty.
Most farm households are poor, and poverty has taken them away from a modern, forward-looking economy to primitive, subsistence farming. All rights reserved. World Bank Office Romania.