Borrowing helps. Interest hinders. Debt kills.
Economic growth can be achieved through a number of means. Looking to an economy like a business, it can either grow internally or externally. Internal growth could be a business increasing its range of products or reinvesting its profits. External growth factors include mergers and borrowing.
Many developing countries see borrowing money as a method to improve stability and better their growth prospects. The extra capital can be used to fund growth in infrastructure or provide seed capital for infant industries. In the short run, it really is a miracle worker.
However, short term thinkers don't recognise the long term economic impacts of their actions. The debt plus the interest must be paid back. Indeed many developing nations or nations in need find it tough to even pay off the associated interest. The debt increases in value and becomes more difficult to manage or control.
Indeed, in relinquishing control of their financial security to a creditor, the country has lost financial freedom. We can look at Greece as a real world example. The IMF and European Commission continue their bailout talks and force policies onto the Greek Government.
Syriza has been put in power through the will of the people to avoid austerity. However, we can see that the relative power of the people is minuscule compared to the power of a large organisation or a group of nations. The Greek Government has limited choice, even in its own radical leftist policies. They have backed their point of view through the referendum, but even here, it has limited effect. Unless free of the forced debt, the Greek people are not free to choose their destiny, to choose how their society works and co-operates.
Debt can be a burden, but it can also be a God-send, on the surface...
For this, we look to China. China is a rapidly developing economy. the growth is fueled by inward investment and export growth. However, much of the economic growth here has been artificially created through bank borrowing and debt. The rapid growth is unstable and cannot continue in the longer term. They are creating a bubble of economic growth.
If solutions are not found to eliminate the debt in any of these situations, the economic situation will continue to deteriorate. Such an interconnected system of lending and borrowing is fragile.
Imagine the 'Asian Tiger' growing in size on a sheet of thin ice in the Arctic. Their economy is producing unspecialised goods, goods that should be made in areas of comparative advantage, not absolute. As the tiger grows, as does the pressure on the ice. The ice fractures. The ice breaks. The tiger falls. The tiger dies. The thin veneer of debt fuelled growth is unsustainable. When the debt cannot be settled, the economy, ever so dependent on this growth factor, withers and dies.