What compels states to engage in the "race to the bottom?"

a. As debt forgiveness is only available to states in hopeless international debt situations, states that want to default on their debts are given an incentive to put themselves in the worst possible financial shape.
b. There is a limited amount of the developed world's resources devoted to foreign aid, and aid donors only give to the neediest states, so there is an incentive for states seeking aid to appear as poor as possible.
c. States have a desire to attract or maintain the presence of large corporations.
d. Elites in the less developed world tend to invest in instruments of force to maintain control in the short run instead of developing their economy to help foster long-term stability.
e. States attempt to comply with mandates of the IMF to meet eligibility requirements for new loans.


C

Political Science

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