Economic world - strategies to reduce development gap Flashcards
What is the development gap?
The difference in the levels of development between the richest and the poorest countries.
What are the different ways to reduce the development gap?
- Investment
- Industrial development
- Debt relief
- Microfinance loans
- Aid
- Free trade
- Intermediate technology
Describe how investment can shorten the development gap?
- Two types of investment:
- Investment within the country which is raised by the government within the country
- foreign direct investment (FDI) - invested by other countries and TNCs to provide new jobs and income. It can help fund improvements in infrastructure, services, dams and reservoirs and industrial development.
- For example, Chinese companies give FDI to countries in Africa
What does this improvement in investment trigger?
- A multiplier effect - by helping businesses to thrive + offer more jobs and economic opportunities to ultimately more income for the country
How can industrial development help?
- many LICs trade with primary products leaving them vulnerable to poor economic growth - due to overproduction and tariffs
- In contrast, manufactured goods are sold at much higher prices and are less vulnerable to price fluctuations
Give an example of industrial development and how it helped?
Tourism - brings in more jobs so more economic opportunities = more income into the country so government can use this to fund improvements in infrastructure healthcare and education
How does aid help with development?
Aid - financial assistance given by other countries that does not need to be repaid.
What are the two types of aid?
- Long term - developments in sanitation, water and education
- Short term - in response to natural disasters
What is debt relief?
Where the debts of a country is wiped out/cancelled to allow more money to be invested in development projects such as road building and healthcare.
Give a reason why debt relief is a bad idea?
- Corrupt governments may mean that money doesn’t actually go where it is supposed to.
In _____, the IMF (___) decided to provide _____ _______ for 19 of the poorest countries.
2006; International Monetary Fund; debt relief
What is fair trade?
This is a scheme designed for farmers in LICs to get a better deal for the crops that they grow. This means that, farmer’s products are a better value in the global market.
What is an environmental benefit of fair trade?
- Farming is more eco-friendly as saved money from the more money that farmers earn is kept to improve farming practices.
What is intermediate technology?
The use of simple but useful tools to help improve quality of life. They are also affordable too.
E.g: solar cookers, solar powered LED light bulbs in Nepal.
What are microfinance loans?
Small loans given for farmers in LICs to use for financial investment to start their own business or become financially independent.
How is this helpful for subsistence farmers?
It helps them to get out off a cycle of poverty.
Microfinance loans need to be _______.
- repaid.
Why tourism a good way to reduce the development gap?
It brings in valuable foreign currency, a range of improvements including infrastructure, healthcare and education
It brings in employment opportunities in the service sector, raises income.
Where is Tunisia located?
This is a North African country bordering the Mediterranean Sea and the Sahara Desert.
What are the different factors that make Tunisia a favourable location for tourism?
- favourable climate with hot summers and cold winters
- a range of historical and cultural attractions, like Carthage.
- several Star Wars locations were filmed there.
- it has good connections with Europe.
How has tourism grown in Tunisia?
- a year on year growth of 1.14% for the time period between 1976 and 2017.
- since 2009, an exponential growth in travel and commercial service imports.
How has tourism reduced the development gap in Tunisia?
- over 370,000 jobs made in the tourism sector
- more development in local businesses like restaurants, taxis, shops and the construction industries
- growth of tourism leads to the growth of the agricultural sector as demand for food has increased due to more tourists needing more food.
- economic boost provided by tourism - the government can use more money/ investment to invest in education and healthcare, further widening economic boosts and opportunities, increasing life expectancies.
