A Debt Relief Mechanism from the Constructivist Perspective

Subject: Economics
Pages: 1
Words: 269
Reading time:
< 1 min

The devastating effects of COVID-19 have overburdened the less developed and developing economies, making it challenging to cover their debts. The G-20 established a debt relief framework to help these countries deal with the pandemic. The actors agreed that an eight-month debt suspension period would be offered to states with high debts and low economic growth. China, a major creditor, agreed to the terms developed by G-20 to allow less developed countries to service their loans after a specified time. From a constructivist point of view, the G-20 shows a significant concern for world affairs and contributes mainly to developing policies that affect other countries. Constructivism best explains the move to offer debt relief to the most affected states by coronavirus because it is appropriate behavior to allow these countries to deal with the pandemic. The debt relief policy was largely forged because it was the ‘right thing to do’ since countries with underdeveloped economies cannot service their debts and deal with the coronavirus.

Constructivist theorists claim that the world is socially constructed, meaning that specific states’ actions affect other nations. In this theory, both the material and conceptual structures should correspond to the social relationships between the two countries. The shared understanding or intersubjectivity guides the actions of different states in shaping global policy. Similarly, the G-20 countries formulated the debt relief program because of the shared knowledge that less developed countries are significantly affected by the coronavirus despite their low economic status. In that case, providing a debt suspension period is imperative to ensure such nations can assist their populations.