Approaches to development gap
Neo-libaralim; Transfers controll over the economy from the public sector (gouvernment) to the private sector (individual bussiness). Its based on privatisation (where private companies own servies), market forces (the forces that influence demand and supply of commodites) and reducing gouvernment intervention. This often hinders development, as private companies need to also pay their shareholders and executive managers. Therefore they tend to cut corners and their actions are always money-led.
Marxism; The belife that capitalism is based on the explotation of the prolatariet, by those who own the means of production (borgousie). It seeks to attain a classles communist society.
Populism; a philosophy that supports the common people. This is unlikley to change the development gap
However, there is a new 'ant-development' philosophy which argues;
- top-down development widends spatial inequalities
- its environmentally damaging and unsustainable
- it undermines democracy
- it undermines the culture and traditions
- development is 'eurocentric' and based on material properity. They argue, countries should be left alone to determine what path of development they wish to take and how they wish to do so. They have the abilityto develop through a bottom-up approach.
Project aid; a form of developmnet aid, used to fund large scale projets (e.g, constuction of dams)
Humanitarian aid; aid used to allieviate short term suffereing. this can be provided by gouvernments or ngo's. (e.g during the aftermath of a ntural disaster)
Voluntry aid; aid provided by ngo's, who raise money in developed countries in order to help local communities develop small -scal projects.
Official development aid
- consists of developed countries from the OEDC (organisations for economic development and cooperation) who have agreed to economically support developing countries, politically, socially and econmically.
- This is a top-down scheme, which involves giving developing countries loans, which must be repaid
- This can be through bilateral aid (on a gouvernment to gouvernment basis) or multileral (involving many international organisations)
criticism of top-down approaches
Problems with top-down approaches?
- They are often capital intensive (schemes that require a large sum of money in order to provide a good service, e.g- building large dams)
- They involve intrest groups that compete over bussiness contracts and investment in productive bussiness activites
- The money is likley to diverted to the rich, creating winners and losers
- Most likley to invest in urban areas/ high-profile projects which will attract alot of publicity and large scale funding.
- They are most likley to support projects/areas with a political interst in the donar countrey
- most likley to support areas with historic ties (e.g, post colonial countries)
- most likley to support projects based on global topics such as HIV./AIDS or global warming
- Developing country may become dependent due to the repaiment of loans, and spiral into a debt crisis.
Aid Case studies
Humanitarian aid; UK aids migrant crisis in syria. HOW?
- David Cameron has stressed that Britain is the second-largest bilateral donor - (Gouvernment to gouvernmnet basis), supporting Syrian refugees in the region.
- The government says the UK has contributed £1.1bn since 2012 on food, tents and other humanitarian aid
Voulntary aid; Practical action shelter project in Kenya. HOW?
- Practical action shelter, equipts locals with skills and educates them on construction. These skills can then be used in the future to develop other areas of their community.
- Its aim is to develop poor 'make-shift' homes, by using locally sources materials.The locals use their own labour and traditional techniques to rebuild their community homes.
- Practical Action developed a solar powered water pump that can pump up to 30,000 litres of clean water per day. This is extremly sustainable and reliable, due to the consistently warm climate, providing reliable solar energy (renewable).
Trade investment and economth
Trade expansion has allowed economic growth in developing countries, and their share in the international (multilateral) trade has increased over the years. Developing countries, especially thoses that are part of the World trade organisation (organisation that promotes a free flow of international trade) have benefited from open forign markets/investments. For e.g;
- There has been an increase in South-south trade flows
- Increase in TNCs from the south- employing 6 million
- global economic output- (exporting of goods), was highest in China at 10% and india at 8%, compaerd to developed countries at 2%
- half of developing countries exports and FDI outflows were to other developing countries, suggesting decreased dependecy on developed countries
- FDI (forign direct investment) inflows into developing counrty reached its peak in 2006, at 334 billion
There are many different ways in which gouvernments can manage trade. They can apply many forms of 'trade intervention'/regulations, in order to influence patterns of exports and imports;
- devaluation (lowering exchange rate)- lowering the value of the countrys currency when importing their goods. This increase the competitivness of exports
- embargo- (an official ban on trade or other commercial activity with a particular country.)
- Trade blocs- such as the EU, NAFTA and ASEAN. This means there is free trade/no barriors for countries within thoses trade blocs.
- Export credits- gouvernment financial support to forign buyers, to assist them in the finanacing of purchasing thier goods.
- special economic zones- zones in a countrey, where trade laws differ from the rest of the countrey, encouraging fdi. The host country earns forign income and increases the skills of its workforce. for e.g, china
- Tax concessions- incentive (reward/encourge), a reduction in the amount of tax that has to paid by the producers when investing in a country.
- Export processing zones (epz)- areas that offer incentives and barrier-free evrironment. Attracting forign investment, for export-oriented production only.
There has been an increase in free-trade (e.g, the WTO- consists of 162 countries). There has also been an increase in regional trade agreements (trade blocs), including;
- ASEAN- association of southeast asian nations, NAFTA- north american fair trade association, EU- europian union. This is know as 'a new reigionalism'. These trade blocs encourage free trade and protection within the trade blocs, but tend to put up barriers against external countries.
Fair trade- NGO (non-gouvernmental organisation)
The price of primary products in world trade fluctuates. Then the price is low, buyers of these products tend to pay less for the product. Meaning producers recive lower wages, much of the profit goes to the 'middle men'. Farmers of coco beans often work for less than $2 a day.
Aim; To ensure that small-scale producers in developing countries recieves a gaurenteed, fair price for their produce. Fair trade sets a fair, minimum price for products, meaning producers in deveoping countries are more economically secure.
- Fair, gauranteed wages allows producers and communites to invest in their infrustructure, school, health.
- 5 million ppl have benefited form fair trade in 58 countries
doha development agreement; (From 2001-2008)
- The first multilateral trading agreement, to improve trade for developing countries.
- included 153 countries from the world trade organisation
To develop rules wich will ensure a secure trading system, with protects all players. Especially small players- poorer countries, from barriers such as protectionist policies in more developed countries. Meaning the poorer country cant acess their market.
- Agreements on how to cut tarriffs on agriculture, manufacturing, in order for the developing countries to export more to the developed countries such as the USA and EU.
- Agreements on environmental concerns - developing countries experience industrial growth.
- encouraging investment on infrustrure, by giving them oppotunites to trade and more market acess in developed countries
However it failed;
- Some countries such as BRIC's benefited more from the agreement that poorer countries
- Competion between china, india and other developing countries