Disparities in Wealth and Development Flashcards
elements of Quality of Life:
Economic: income, job security, standard of living, unemployment rate
Physical: diet (not connected with economic/income), nutrition, water supply, climate, hazards
Social: family, friends, health, education, (e.g. gender gap)
Psychological: happiness, security, freedom
Indicators of Wealth
Measurements of regional and global inequalities
GDP - Gross Domestic Product: value of goods and service produced by a country in a year
- Challenges with this indicator: high GDP ≠ Good Quality of Life, big countries like India with a high GDP look good on paper, while Norway is not. The scale differences distorts the view of Quality of Life, which is much better in Norway compared to India.
GNI - Gross national income: GDP + income received from other countries
GNI per capita: takes into account different population of countries (allows for better comparisons when the populations are vastly different)
PPP - Purchasing power parity: takes in consideration the way in which the cost of living can vary between countries
- A dollar buys much more in China than the US (“Big Mac Index”)
HDI - Human Development Index: best measure of development
- Longevity (life expectancy —> how healthy is your country)
- Adult literacy and average number of years’ schooling (social)
- Standard of living-income adjusted to local cost of living (PPP)
- Doesn’t include the Psychological and Physical aspect (but it does take Social and Economic aspect in consideration)
High levels of human development can be achieved without high incomes!
- Vietnam and Pakistan has relatively the same income levels, but Vietnam ranks higher for HDI (since Pakistan has huge gender gap in education)
- That is because Vietnam and other similar poor countries with a high HDI (Cuba, Costa Rica, Sri Lanka) deliberately devote scare resources to human development.
Gross National Happiness
- Dragon King Jigme Wangchuk of Bhutan first used the term in 1972
- Meant to be an alternative to the GDP and looks at quality of life, and social progress in light of Buddhist influences
- 9 domains (see website above) and 4 pillars: the promotion of sustainable development, preservation and promotion of cultural values, conservation of the natural environment, and establishment of good governance. (wikipedia)
Social Progress Indicator
Other indicators of Development
IMR - Infant Mortality Rate: indicates level of health care, water supply, housing, nutrition and sanitation as most fatalities are preventable - LEDCs
GDI - Gender-related development index: uses same indicators as HDI but adjusted for gender
GEM - Gender Empowerment Measure: basically same as the Gender Gap Index in terms of political participation and economic (disparity in income)
HPI: Human Poverty Index
The UNDP has calculated that the cost of eradicating poverty across the world is relatively small compared to global income — not more than 0.3% of world GDP — and that the political commitment, not financial resources, is the real obstacle to poverty eradication.
nutrition
- 815 million hungry people in developing countries
- 10 million die every year of hunger and hunger-related diseases
- ¾ of all hungry people live in rural areas, dependent on agriculture for their food
- Even though woman are the world’s primary food producers, 7/10 of the world’s hungry are women and girls
stages of development
North-South Divide (Brandt Report) (static)
1st, 2nd, 3rd World (static)
MEDC’s vs. LEDC’s (flux)
Developed and Developing (flux) + least/most developed
- NIC’s (—> the biggest NICs: Asian Tigers—BRIC (they have the biggest economies of NICs), other examples Malaysia, Chile, Taiwan, Singapore, Hong Kong, South Korea (the older the generation of Koreans, the smaller the height because of poor nutrition in the past, etc.) These countries had FDI from America, for example McDonalds, Ford etc.
development gap
Why have some countries developed faster than others?
Physical geography: landlocked, small island states, tropical countries, natural resources, hazards
Economic policies: open economies developed faster than closed, fast growing economies have high rates of saving and low relative to GDP, lack of corruption
Demography: Highest rates of growth occur where the birth rate has fallen the most
History: relationship between colonial powers and treatment of colonies (Portugal vs UK) dependency theory
marginalisation measurement
+ case study of marginalisation
Gini Coefficient: technique used to measure income inequality within a country
- Defined as a ratio with values between 0 and 1
- 0 is perfect equality whereas 1 means that one person has all the money in one country
- The common thing with countries with a high Gini coefficient is the apartheid
Denmark: 0.232 <— the closest to 0
Namibia: 0.707 <— the closest to 1
______________
Indiginous Australians
Whereas Australia as a whole ranks between Sweden and Iceland as ninth in the world for life expectancy, indigenous Australians come between the Cambodians and Sudanese at 178th. Those born Aboriginal can expect to:
- die 20 years earlier than their non-indigenous compatriots
- have IMR nearly four times higher than that of the general population
- be seven times more likely to catch meningitis
- be 10 times more likely to catch tuberculosis
An Aboriginal child is twice as likely to be born with a low birth weight and five times more likely to have a mother younger than 17. Poor housing exacerbates other problems; dusty and unhygienic surroundings mean than deaths from respiratory disease are four times more common; and deaths from heart disease and strokes are three times more common. Aborigines are 45 times more likely to become victims of domestic violence and 40% more Lillie to commit suicide.
Poverty, racism and dispossession are at the heart of the problem. This problem is well understood and could be prevented without the need of dramatic technological help.
visualisation of inequality
Lorenz Curve: shows the degree of inequality that exists between two variables
Income Disparities Within Countries
and social mobility
The gap between rich and poor has grown in most countries, though this doesn’t mean that poor people have become poorer, the opposite, poverty has been decreasing but the richer have been getting richer faster.
Social mobility tends to be higher in countries where income is distributed more evenly (it’s easier to move from poor to rich, when the equality is high) (Germany in contrast to India, where people are still born into a certain status, whereas in Germany this doesn’t happen).
While a certain degree of income inequality is useful in rewarding effort, talent and innovation, huge differences can be counter-productive and damaging for most economies.
causes of increased inequality in China
In China it is the difference between urban and rural (regional differences)
- Urban workers earn much more than rural
- Productivity is much slower in agriculture
- Widening gap between those with and without skills
- Widening gap between those with education and those without
positive and negative aspects of slums
Negative Aspects
- High concentrations of poverty, broken families, unemployment and social exclusion
- Limited access to credit and formal jobs (informal: selling drugs, prostitution etc.)
- Often an area of pollutants and noxious waste
- Poor water and increase in water bourn diseases such as cholera and typhoid
- Unsafe housing, insecure land tenure, fragile land
- Overcrowding
- Little police presence
Postive Aspects
- the first stopping point for low-income employees immigrants; low-cost and affordable housing that will enable the immigrants to save for their eventual absorption into urban society.
- 32% of the world’s urban population (1 billion) live in slums
- Most growth is occurring in slums (more in LEDC’s)
- Have a vibrant mix of different cultures frequently resulting in new forms of artistic expression. They are points of assimilation for immigrants.
- Informal entrepreneurs can work here and have clienteles extended to the rest of the city
- Informal employment, based at home, avoids commuting.
- There is a strong sense of kinship and family support.
- Crime rates are relatively low.
Case Study: Regional Contrast in Brazil
The South-East region in the economic core region of Brazil. Over time the South-East has benefited from spatial flows of labour, raw materials and capital. The region grew rapidly through the process of cumulative causation (upward spiral / positive feedback).
This process resulted significantly widened regional disparity between core and periphery.
However, more recently some regions of the periphery benefited from the tickle-down effect, though inequality remains.
The South-East’s primary, secondary, territory and quaternary industries generate large amounts of money for Brazil. The natural environment offers advantages for the development of primary industries.
- Good Climate: warm temperature, adequate rainfall and rich terra roxa soils (weathered from lava) have provided many opportunities for farming. The region is important for coffee, beef, rice, cocoa, sugarcane, rubber and fruit.
- Large deposits of iron ore, manganese and bauxite have made mining a significant industry. Gold is still mined.
- The region is energy rich, with large deposits of oil and gas offshore. Hydro-electricity power is generated from flowing over steep slopes.
- The rainforest’s temperature provides the raw material for forest.
- Fishing is important of many of the coastal settlements.
Historical Context:
The South-East had many coastal settlements.
In the 1950s and 1960s the government wanted Brazil to become a newly industrialised country. Because the South-east had the best potential of all Brazil’s five regions, investment was concentrated here. The region is the focus of the country’s road and rail networks.
However, Brazil’s government created the new capital “Brasilia” to shift the disparity of wealth, since Brasilia is located more in the middle of the country. The South-East region contains the main airports and seaports. It also has a significant pipeline network for oil and gas. More transnational corporations (TNCs) are located in the South-East than in the rest of Brazil. With the highest population density in Brazil, the labor supply is plentiful. The region also has the highest educational and skill levels in the country.
According Clark Fisher Model, Brasil cannot be generalised as one country, as the regional differences are too big. Hence, one can state that only the South-East of Brasil has reached the tertiary level, while the rest of Brasil is in the post-industrials state, being active in the primary and secondary level, and only rarely in tertiary.
common origins of disparities
Education may affect poverty in two ways:
- It may raise the incomes of those with education
- By promoting growth in the economy it may raise the incomes of those with given levels of education
- Also, those with higher education tend to have fewer children.
- Electricity is a must-have for sufficient education (light, internet, etc.)
Land ownership (tenure)
- The distribution of land ownership
- In Brazil, 44% of all arable land is owned by just 1% of the nation’s farmers
- Land reform is the process of breaking up the large estates and redistributing it so that the endless poor can benefit as well.
Case Study: Brazil Tenure Issue
The demonstrations in the capital is an effort by the MST (Landless Rural Workers Movement) to put pressure on the government to distribute land within the next six months to at least 90,000 families who have been quoting in different parts of the country since 2003, many of them camping by the roadside. People in the Terra Libre settlement are all too familiar with this situation.
The State has not legalised their ownership of the land where they have lived “on a temporary basis” for over a decade with endless battles over inheritance and compensation for expropriation in the courts.
Terra Libre occupies 460 hectares of an old state, which was deemed unproductive according to official criteria set out in the law on agrarian reform. The problem is that until they have legal title to the land, the settlers do not have access to credits and tools from INCRA.
The distribution of land in terms of ownership has been a divisive issue since the colonial era. Then the moronity rewarded those in special favour with huge tracts of land, leaving a legacy of highly concentrated ownership. 44% if all arable land in Brazil is owned by just 1% of the nation’s farmers, while 15 million peasants own little or no land. Land reform is a partial solution, which involves breaking up large estates and redistributing land to the rural landless. Although successive governments have vowed to tackle the problem, progress has been limited due to the economic and political power of the big fazenda or farm-owners.
In the mid-1990s land reform clearly emerged as Brazil’s leading social problem, highlighted by a number of widely publicised squatter invasion. Such land occupations have occurred in both remote regions and established, prosperous farmlands in the South and South-East. Each year, the MTS organises a series of land invasions, takeovers of buildings and other protests. The purpose is to A. keep the issue high on the national political agenda, and B. to commemorate the killing eleven years ago of 19 landless protestors by police in the state of Para.
While the MTS does make process, the success is little because they only invaded “bad” land. Farmers cannot grow a lot on this land.
trends in education
Since 1999 the number of children not attending school has fallen by 33 million.
Sub-Sahara Africa has increased enrolment at five times the rate achieved in the 1990s, with countries such as Benin and Mozambique registering rapid advances. In developing countries and western Asia the number of children out of school has more than halved, partly through policies aimed at getting more girls into school. In India, the number of children not in school fell by almost 15 million in just two years, from 2001 to 2003. The gender gap, in that aspect, has also narrowed. However, it varies strongly between countries:
Being born into a poor household significantly raises the risk of deprivation. In the Philippines there is a four-year education gap between the richest and poorest households. The gap in India is seven years.
Disparities within countries are often bigger than disparities between countries.
theories of development
- Dependency Theory
- Modernisation Theory - Rostow’s Model of Development
- World System Theory
theories of development
Dependency Theory
Dependency Theory
Blames the underdevelopment of the developing world on exploitation by the developed world: colonialism and later neo-colonialism
As the more powerful country exploits the resources of its weaker colony, the colony becomes more and more dependent upon the stronger power. The problem of poor countries is not that they lack the resources, technical know-how, modern institutions or cultural developments that lead to development, but that they are being exploited by capitalist countries.
Sees development as a clash of interests between ruling capitalist (maximum profit) and the working classes (land safety, etc.)
Stresses that to be developed is to be self-reliant and to control national resources
It incorporates politics and economics in its explantation.
It takes into account the historical process of how underdevelopment came about, that is, how capitalist development began in one part of the world and then expanded into other areas (imperial expansion).
It believes that modernisation does not necessarily mean westernisation, and that undeveloped countries must set goals of their own, appropriate to their own resources, needs and values.
theories of development
Modernisation Theory — Rostow’s Model of Development
Uses the economic history of a number of developed countries to explain a countries current level of development
Recognises five stages of development that all countries go through
Capitalism is fundamental to economic development
Distinct economic and social changes are required for a country to move from one stage to another
‘take off’ stage is the most crucial, characterized by:
- A rise in the rate of productive investment to over 10% of national income
- Development of one or more substantial manufacturing sectors
- Administrative systems that encourage growth
theories of development
World System Theory — Core, Periphery, Semi-Periphery
Looks economic, social and political development and treats the world as a single unit
three main characteristics:
- A global market
- Many countries, which allows political and economic competition
- Countries fall into three economic levels (core, semi-periphery and periphery)
Countries can move from one level to another if their contribution to the world economy changes
Wallerstein argued that capitalist development led to cycles of growth and stagnation. One of these cycles is a long-term economic cycle known as a Kondratieff Cycle. This identifies cycles of depression at roughly 50-to-60-year intervals. The last two were during the 1920s and 1930s and during the late 1980s. Stagnation is important for the restructuring of the world system and allows the semi-periphery to become involved in the development process.
three views on how to reduce disparities: top down, bottom up, trickle down
(top-down) Modernisation Theory-Free markets, internal changes necessary for development (socio-economic and political changes), Rostow’s development model
(trickle down) Neo-Liberal economic theory-break down all trade barriers, WTO IMF, World Bank work on this theory, Foreign Direct Investments
(bottom-up) Marxist-populous, efforts to create more entrepreneurs within communities and invest in their initiatives, NGOs
reducing disparities
Sources of Income for Developing Countries
- Export earnings (often very small proportion and from primary sector)
- Investment inflows (FDI) —> TNCs
- Migrant remittances
- Foreign aid
reducing disparities
The Millennium Development Goals (MDG’s)
- Established in 2000
- UN Established goals in order to defeat POVERTY
- All 189 member states pledged to meet the goals by 2015
- 8 goals in total
- Represent the basic human rights of every person: Health, education, shelter, and security
Goal 1: Eradicate EXTREME poverty and hunger (making progress)
- Halve the proportion of people whose income is less than one dollar a day
- Achieve full and productive employment and decent work for all, including women and young people
- Halve, between 1990 and 2015, the proportion of people who suffer from hunger
Goal 2: Achieve universal primary education (almost there)
- Ensure all children complete a full course of primary education
- Malala
Goal 3: Promote gender equality and empower women (progress…)
- Ensure literacy parity between young men and women
- Women’s equal representation in national parliaments
- Eliminate gender inequality in primary and secondary education
Goal 4: Reduce child mortality (almost there)
- Reduce by 2/3 the under 5 mortality rate
- Universal child immunization against measles
Goal 5: Improve maternal health (making progress)
- Achieve universal access to reproductive health
- Reduce by ¾ the maternal mortality rate
Goal 6: Combat HIV/AIDS, malaria and other diseases (almost there)
- Halt and begin to reverse the spread of HIV/AIDS
- Achieve universal access to HIV/AIDS treatment
- Have halted and begun to reverse the incidence of malaria and other major diseases
Goal 7: Ensure environmental sustainability (almost there)
- Reverse loss of forests
- Reduce biodiversity loss
- Integrate the principles of sustainable development into country policies and programs and reverse the loss of environmental resources
- Halve the proportion of the population without sustainable access to safe drinking water and basic sanitation
- Improve the lives of at least 100 million slum dwellers
Goal 8: Develop a global partnership for development
- Solve the developing world’s debt crisis
- Working with the private sector, develop ICT for developing countries
- Address the special needs of the least developed countries; small island states and landlocked developing countries
- Example: helping LEDC’s access European Markets
MDG Criticism
- data time lags: for some indicators the most recent data is 2012, for others it could be 2010
- Not all countries are able to accurately track the indicators
- More than 40 developing countries could not track poverty and hunger
- That data is often unreliable
- Household surveys were used and many could not be reached
The China factor
- China’s progress has influenced the data in ways that overshadow the rest of the world’s data (look, for example, at the halving extreme poverty data)
- but isn’t people people? —> loss of focus is what is important.
reducing disparities
E x p a n d i n g Trade & Market Access
- Expansion of trade, it links the labour markets of developed countries more closely with developing countries, raising average living standards in developing countries and decreasing likelihood of war.
- Unfair trading patterns cause the development gap to widen. MEDCs account for 75% of the world’s exports and over 80% of manufactured exports.
- In recent years, this link has become a two-way flow, where the developing countries are now also substantial exporter of services such as shipping, tourism and more.
FDI is key to increasing trade which plays a role in reducing the development gap and global wealth distribution
Best example is the Asian Tigers where Japanese FDI boosted their level of trade with the rest of the Asian region:
Japanese FDI took several forms:
- Offshoring and outsourcing of business and manufacturing in countries with cheaper labor supply (Korea, Taiwan) [this boosted Korea’s market]
- Filter-down concept to second-generation (Malaysia, Thailand), third-generation (China and India) and now possibly fourth (Vietnam)
terms of trade and trade deficits
the relative price of exports in terms of imports and is defined as the ratio of export prices to import prices. It can be interpreted as the amount of import goods an economy can purchase per unit of export goods.
Poor terms of trade lead to trade deficits
- Leads to further debt as a country tries to borrow money from Western lenders in order to improve techniques and equipment
- Creates a cycle of dependency
advantages and disadvantages of free trade
advantages
- local companies can become global companies
- faster economic growth in countries
- TNCs have more capital, that can, in emergencies, be spent to clean up any accidents, thanks to free trade
- Mexico has increased its exports since joining NAFTA
- improves relationships between countries, less wars (McDonalds Theory)
- Job creation
- Workers may improve skill and education level Infrastructure like roads and ports are improved for the whole country (FDI)
- Laws can be put in place to protect worker rights
- More money can be made by selling to external markets rather than just domestic market
- Greater variety of products
- Increased competitiveness and lower prices
- It is hard for countries to be self-sufficient because they may lack fertile soils or fossil fuels - they need to trade to survive and grow
disadvantages
- TNCs may take over local producers (e.g. Walmart)
- Exploitation of workers by TNCs and paid low wages for long hours
- Dependency on foreign countries imports e.g. Europe relies on Russian gas
- Countries may become reliant on foreign workers e.g. UAE rely on European, South Asian and Filipino workers
- Producing locally should reduce transport costs and certainly reduce air miles
- Local companies will use more appropriate technology and take greater care of the environment
- The most skilled jobs will be taken by foreign workers and may lead to unemployment
- Much of the profits will go overseas e.g. economic leakage e.g. Hiper Piaz profits go back to Walmart in US
- TNCS often don’t care about the environment of other countries and may cause pollution e.g. Union Carbide in Bhopal, India
- Fast food franchises like Starbucks and Burger King may cause local traditional restaurants to close
- Fast food restaurants may worsen people’s diets
- TNCs may close factories during economic recessions leading to unemployment
- Countries may be forced to change policies to suit TNCs e.g. lower taxes.
reducing disparities
trading blocs
An arrangement among a group of nations to allow free trade between member countries but to impose tariffs (charges) on other countries wishing to trade with them.
This free access to each other’s markets is important as it allows a much bigger market.
reducing disparities
Fair / Ethical Trade
Having organisations that try to bring benefits to people at virtually every step of the production process, helps to alleviate poverty in some of the world’s most marginalised communities.
health and safety at work, use of pesticides and chemical fertilisers, employment of children, pay and conditions, and even the freedom of workers
- Ethical trading increases productivity and sales.
- Nevertheless, there are conflicts of interests.
Fair Wage — as most people want paid work, but the opportunities are very limited, Fair Trade is a much needed service where people receive a fair pay; multiplier effect, debts paid, etc.
Social Benefits — improvements in wellbeing (e.g. respected women, confidence, rights)
Gender equality and women’s empowerment — as a stated goal of Fair Trade, and often difficult to change, Fair Trade is able to help with the employment and a higher than average wage in culturally acceptable conditions. In addition, women can meet, socialist and discuss problems.
Conclusion
Fair Trade contributes to development. The economic and social benefits provide a means for families to cope with poverty, to improve their conditions though education and healthcare, to acquire assets, and to develop the skills and confidence to engage in new economic activities — multiplier effect. The voices of the women themselves are a testimony to the many “good changes” they feel are attributed to being a Fair Trade producer.
However, while Fair Trade helps individuals and provides a model of good business practice, it cannot alone deal adequately with the structural causes of poverty and underdevelopment in countries such as Bangladesh.
top-down and bottom-up aid/development
Top-Down Development (Emergency Relief)
- Usually large in scale
- Carried out by governments, international organisations and “experts”
- Done by people from outside the area
- Imposed upon the area or people by outside organizations
- Often well funded and quickly responsive to disasters
- Does not involve local people in the decision-making process
Bottom-Up Development
- Small in scale
- Labour intensive: common projects including building earthen dams, creating cottage industries
- Involves local communities and local areas
- Run by locals for locals
- Limited funding available
- Involves local people in the decision-making process
when is aid effective or ineffective?
When Aid Is Effective
- provides humanitarian relief
- can support better economic and social policies
- helps expand much-needed infrastructure
- contributes to personnel training and builds technical expertise
- provides external resources for investment and finances projects that could not be undertaken with commercial capital.
When Aid Is Ineffective
- Corruption
- It might allow countries to postpone improving economic management and mobilisation of domestic resources.
- It replaces domestic saving, direct foreign investment and commercial capital as the main sources of investment and technology development - dependency.
- The provision of aid might promote dependency rather than self-reliance.
- Some countries have allowed food aid to depress agricultural prices, resulting in greater poverty in rural areas and a dependency on food imports. It has also increased the risk of famine in the future.
- Aid is sometimes turned on and off in responses to the political and strategic agenda of the donor countries, making funds unpredictable, which can result in interruptions in development programs.
- The provision of aid might result in the transfer of inappropriate technologies or the funding of environmentally unsound projects.
- Emergency aid does not solve the long-term economic development problems of a country.
- Too much aid is tied to the purchase of good and services from the donor country, which might not be the best or most economical.
- A lot of aid does not reach those who need it, that is, the poorest people in the poorest countries.
three types of aid
Charity Aid: (small projects such as water pumps, giving a family a goat or food) (NGO’s, individuals)
National Aid: (government agencies that tax payers spend to fund financial and technical assistance). Most money comes from here.
International Aid: World Bank, IMF, and UN (MGO’s)
also, bottom up, top down, official, unofficial
heavily indepted poor countries (HIPC)
[debt relief initiatives, structural adjustment programs, HIPC initiative]
mainly sub-saharan countries
What has been done to deal with debt?
Debt Relief Initiatives
- The problem of toxic or “odious” debt
- This is debt that was given for development projects but ended up in private hands leading to corruption (most of the time, these loans should never be given!)
Jubilee Debt Campaign (Jubilee 2000)
- A movement that helped relieve much of the debt for HIPC’s (because many owed this huge to corrupt leaders who did stupid things with the money e.g. Iran Irak War)
- The “moral hazard”: a counter argument to debt relief that suggests relieving debt will only encourage greater borrowing in the future and further defaults on existing loans
Structural Adjustment Programs (SAPs)
Designed to cut government expenditure, reduce the amount of state intervention in the economy, and promote liberalisation and international trade.
Four main elements:
- greater use of a country’s resource base
- policy reforms to increase economic efficiency
- generation of foreign income through diversification of the economy and increased trade
- reducing the active role of the state and encouraging privatisation of state companies and austerity measures
The measures were sometimes divided into two main groups:
- stabilisation measures, short-term steps to limit any further deterioration of the economy (e.g. wage freeze, reduced subsidies on food, health and education
- adjustment measures, longer-terms policies to boost economic competitiveness (tax reductions, export promotion, downsizing of civil service, privatisation and economic liberalisation)
The Heavily Indebted Poor Countries (HIPC) initiative
launched in 1996 by the international Monetary Fund (IMF) and the World Bank and endorsed by 180 governments
has two main objectives:
- to relief certain low-income countries of their unsustainable debt to donors
- to promote reform and sound policies for growth, human development and poverty reduction.
Debt relief occurs in two steps:
- At the decision point the country gets debt service relief after having demonstrated adherence to an IMP program and progress in developing a national poverty strategy.
- At the completion point the country gets debt service relief upon approval by the World Bank and the IMF. The country is entitled to at least 90% debt relief from bilateral and multilateral creditors to make debt levels sustainable.
heavily indepted poor countries (HIPC)
continued [expanding market access, MEDCs targets, micro credit, grameen bank project]
Expanding Market Access
Is essential to help countries diversify and expand trade.
Trade policies remain highly discriminatory against developing country exports.
- Average OECD tariffs on manufactured goods from developing countries are more than four times those on manufactured goods from other OECD countries.
- Cotton farms in developing countries have improved productivity and achieved lower production costs than their richer country competitors and still can barely compete.
MEDCs should set targets to:
- increase official development assistance to fill financing gaps (estimated to be at least $50 billion)
- remove tariffs and quotas on agricultural products, textiles and clothing exported by developing countries
- remove subsidies on agricultural exports from developing countries
- agree and finance, for HIPCs, a compensatory finance facility for external shocks, including collapses in commodity prices
- agree and finance deeper debt reduction for HIPCs that have reached their completion points, to ensure sustainability
The role of Micro Credit: Break Poverty “trap”
Nobel Peace Prize winner Muhammad Yanus developed the Grameen Bank in Bangladesh to battle poverty.
Tiny loans and financial services to help the poor, mostly women, start businesses and escape poverty (PPP makes 5$ a lot money to poor people)
Poverty trap: being born poor, no school, no job, big family, etc. money needs to be injected into this cycle of poverty.
The method cuts out the corrupt government and gives the money directly to the people who need it.
Mortgage loans is when the bank gives you money, and then you can buy stuff, and then have to pay back over years every month. But banks will only give you money if you can prove to them that you have a stable income of money.
The Grameen Bank Project
Came into operation with the following objectives:
- extended banking facilities to poor men and women;
- eliminate the exploitation of the poor by money lenders;
- create opportunities to self-employment for the cast multitude of unemployed people in rural Bangladesh;
- bring the disadvantaged, mostly the women from the poorest households, within the fold of an organisation format which they can understand and manage by themselves;
- reverse the age-old vicious circle of “low income, low saving & low investment”, into virtuous circle of “low income, infection of credit, investment, more income, more savings, more investment, more income”.
Achievements of Developing Countries
- average real incomes in the poor world have more than double in the past 40 years, despite population growth
- under-five death rates have been cut by 50% or more in every region over the past 40 years
- average life expectancy has rise by more than a third in every region since 1950
- access to safe water has risen from about 10% to 60% in rural areas since 1975
