When a person or business falls behind on their financial obligations, they can file for bankruptcy. Countries, however, cannot do so. Instead, when a country has trouble paying its debts, it is generally forced to cut back on spending—which harms the people who depend on those public services and increases poverty.

The global debt crisis is the result of a combination of factors. The first was the second oil-price shock, which created balance-of-payments pressures that put additional strain on developing economies. That was followed by a change in economic policymaking that promoted borrowing by poor countries. The result is a growing number of countries with unsustainable debt levels. Today, more than ninety percent of the world’s extremely poor live in highly or very critically indebted countries.

In most cases, these low-income countries’ debt problems stem from fiscal imprudence before the 2008 financial crisis. They borrowed too much, often from private investors, who see them as a way to earn high returns on their investments. The resulting debt is often used for imprudent purposes such as armaments, failed or inappropriate large-scale development projects, and private projects benefiting government officials and a few wealthy individuals.

While some Americans may wonder why they should care about the debt crisis in Suriname or Sri Lanka, Gallagher warns that not caring could be costly for America. After all, if these nations are using every cent they have to repay their debts, they won’t be buying American products or services. Moreover, standing on the sidelines as these countries face a debt crisis will hurt US international legitimacy.