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YN -> RE: Iran VS Israel (10/17/2012 5:17:10 PM)
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ORIGINAL: crazyml
Errm... Gross External Debt per capita is a ridiculous measure of national debt, on account of it being grossly distorted by the presence of a banking sector.
I agree the "banking sector" is responsible for much of the external debt, but not that the external debt to gdp is a ridiculous measure.
This is not a measure of "national debt" for "national debt" is merely what the government of a country owes. Some countries have their national debt owed in large part to the people in their own countries. This external debt describes how much money is owed by a country to other countries. the comparison scales it to the amount a country's GDP produces in a year.
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Note that while a country may have a relatively large external debt (either in absolute or per capita terms), it could be a "net international creditor" if its external debt is less than the total of the external debt of other countries held by it. For example, Luxembourg, Switzerland, and China are net international creditors.
But since many others including the EU, the UN, the OCED, the ECB and the economic press also consider this computation a valid comparison, just where do you see the flaw besides how various banking organizations being largely responsible for the offshore loans?
search for "external debt to ppp" (PPP is GDP per capita in essence) or "external debt to gdp" and you will see millions of results.
Even Wiki is obliged to produce a table and add the information as to how this external debt compares to a nations gdp and ppp - http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
But what do you think is a better measure of how broke a country is then how much it owes outside its borders compared to its yearly production?
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