Debt and Aid

Question 1

LEDC’s face a debt crisis from borrowing money in order to survive and fund development projects - how does this affect their ability to develop?

Answer 1

They often spend more money repaying debt (as it comes with conditions and interest) than on their own infrastructures + development

Question 2

How does the dependency theory explain the debt crisis?

Answer 2

Developed countries colonised underdeveloped one’s and thus restricted their economic development (e.g controlling the phillipeans - bell trade act) - this meant that when countries gained independence they essentially had no other option but to borrow money to develop
- also aid doesn’t always go to the correct place e.g governments embezzle the money or spend it all on weapons etc

Question 3

Aid can be given in 3 ways

Answer 3

1: government gives direct financial support to another government in need
2: grants and loans for international organisations e.g world health organisation, world bank
3: non-government organisations give support and direct financial support with money from the public e.g oxfam

Question 4

Modernisation theory on aid

Answer 4

Aid should be given to countries willing to accept western ideals and ways of developing e.g capitalism

• trickle down effect: elites of LEDCs get aid and this can lead to jobs etc which eventually reach the poorest

Question 5

Neo-marxist theory on aid

Answer 5

aid is a tool to serve capitalism due to the conditions attached that allow for exploitation within trade by TNCs

ulterior motives: aid tends to go primarily to non-communist governments in order to influence the politics and ideologies of other counties (e.g during cold war US helped eastern europe)

Question 6

Neo-liberal / new right theory in aid

Answer 6

Aid involves too much state intervention and depended on MEDC’s whereas countries would develop better if the focus was on the free market