Aid vs Trade

Question 1

4 advantages of aid

Answer 1

Targeted to fulfil needs
Doesn’t rely on pre-existence of infrastructure
Can stimulate trade
Can raise productivity allowing competitiveness

Question 2

4 disadvantages of aid

Answer 2

Destroys private sector by creating firms focused on social benefit not pmax that are uncompetitive and dynamically inefficient (distortion of local markets)
Negatable by corruption and weak leadership
£400bn in 50 years
Highly politicized US biggest donor Israel, exerts pressure through reliance (bilateral)

Question 3

4 advantages of trade

Answer 3

Trade relations less reliant on economic cycle
Strong co-operation can lead to FDI
TNC’s bring transferable skills and innovation
Trade fulfils incentives of both parties meaning better MEDC commitment

Question 4

disadvantages of trade

Answer 4

Exposure of undeveloped markets (maize)
Benefits of trade unequally distributed, coco will grow to $100billion industry but farmers profits shrinking 16-6% of profits
Corruptible 2009-2011 Nigeria lost 136million barrels of oil= to food imports
Encourages ‘race to bottom’