Issues: Unequal flows of money Flashcards
Benefits
● To the country receiving money, foreign direct investments can improve quality of life as it provides an income, usually an income that is higher than other employment in low income countries.
● Aid and remittances can also help to improve quality of life, such as rebuilding after a disaster. For example, $US11.28 million in foreign aid was given to Fiji after the devastating Cyclone Winston (2016), the majority of which has been invested into the Help for Homes scheme, which helps rebuild stronger homes.
● To the country sending money, there are also benefits. Richer countries can take advantage of lower labour costs, maximising their profits.
Problems 2
● Problems associated with unequal flows of money are mainly concerning injustice towards people living in low income countries.
● Companies in low income countries operating from high income countries can create dependencies for workers. They are dependent on the higher wages, meaning they must subject themselves to dangerous situations. Sweatshops with dangerous working conditions and low wages are set up by large companies.
For example, the collapse of a garment factory - Rana Plaza - in 2013, killed 1134 people. The factory was known to provide clothing for well known brands such as Primark, Matalan, and Walmart.
Problems
● Foreign Aid can cause issues, as it can reduce incentive for governments to help their own countries.
● Companies can pressure governments to alleviate taxes or relax social and environmental laws so that TNCs will invest.
● TNCs have been criticised for profiting too much. The flows of money may be larger to low income countries, but the amount of profit that stays in the country is very small.
