krueger59_NIPAH DENNISAFP via Getty Images_ghanaeconomypoverty Nipah Dennis/AFP via Getty Images

China and the Sovereign-Debt Bomb

A failure to get ahead of the developing world’s looming debt crises would represent a moral failure, and would also greatly dampen world economic growth. The international community must finish what it started with the G20's Common Framework, by finding a way to bring China and major private creditors on board.

WASHINGTON, DC – International capital flows have long been a major source of economic growth. Savings in higher-income countries have financed high-yielding investments in low-income countries, generating benefits for all. After World War II, capital flows under the Marshall Plan drove the rapid reconstruction of Europe, and after those countries recovered, they extended their own foreign aid and other official financial flows to the developing world. Private financing also increased substantially; by the 1990s, it accounted for over half of total capital flows to developing countries.