Trade and Aid

Question 1

aid

Answer 1

•refers to economic, military, technical and financial assistance given or loaned to developing countries
•produced by voluntary agencies and ngos
•official development assistance (oda) - organisation for economic cooperation and develops. (oecd) comprise 25 developed countries - members have aid budgets - allocate parts of their resources to oda (1970, agreed to aim to allocate 0.7% of gni to oda - most don’t meet target)
•oda takes form of grants and soft loans to promote econ. develop. and welfare to developing countries
•two types - bilateral and multilateral
•covers grants and loans (have to be repaid) and also writing off of debt

Question 2

bilateral aid

Answer 2

•involves only the donor and the recipient, usually gov to gov
•oda given given directly to a developing country

Question 3

multilateral aid

Answer 3

•donors contribute to a shared fund form which aid is then given to recipients

Question 4

tied aid

Answer 4

•often this - the aid must be used for a particular purpose specified by the donor
•donor country may also specify that the money be paid to one of its own companies to carry out a particular project
•bilateral aid is often tied

Question 5

aid and conditionality

Answer 5

•may be subject to conditionality which is the setting of conditions on aid so that it will be withheld if those conditions aren’t met and will only be given if recipient country abides by certain conditions
•aid may be cancelled if recipient country fails to hold levtiona it reform economy

Question 6

what is a recent development in aid

Answer 6

•the giving of aid by countries outside of oecd group of rich nations - cuba had a successful healthcare system and has sent doctors and other medical aid to developing countries

Question 7

what occurred w aid due to the global economic downturn 2008

Answer 7

•oecd govs came under pressure to cut their oda spending, uk tory and lib dem coalition did not cut aid spending even tho public support for aid dropped (glennie et al 2012)
•under law passed 2013, uk gov has to spend at least 0.7% gni each year on aid
•br aid redirected towards greater support for private businesses and towards countries whose security was seen as important in preventing islamic terrorism from spreading

Question 8

case against aid - neoliberal view

Answer 8

•aid is seen as teaching ppl to be dependant on handouts, taking away their own initiative and their ability to hemp themselves
•counties seen as poor bcs of their own failings and may even encourage them to
•third world counties then demand aid as a right and become trapped in a culture of dependancy
•view that it a project is viable, it should be able to attract investment so that aid in unnecessary

Question 9

evidence of this view

Answer 9

•bauer (1995) - economist who popularised neolib view - argued that aid could not be necessary for development bcs northern countries did not receive aid when they were developing
•suggested that aid implied that developing woled was incapable of achieving what the west achieved
•says the term aid is misleading - implies smth pos. w a more neutral term being gov to gov subsidy - ‘aid’ allows gov to seem like they’re doing smth right - stated that the reality was that aid went to the govs not the ppl

Question 10

aid being criticised from a developing perspective

Answer 10

•moyo (2010) argues that aid has been harmful to africa bcs it has created dependancy, fostered corruption and encouraged poor governance and has not led to develop.
•believes that aid should be phased out and replaced by encouragement and entrepreneurship and the market

Question 11

case against aid - neo-marxist view

Answer 11

•aid is imperialism
•hayter - in book titled aid as imperialism - argues that aid is conditional - one way in which rich countries excercise power over poorer ones so is a form is imperialism
•regards the claim made by western govs that aid helps south as hypocritical - most aid doesn’t alleviate pov. bcs it isnt meant to - real purpose is to strengthen a system which damages the interests of the poor
•most doesn’t go to ppl or countries that need it but to those who are of strategic or other importance to the donor country
•creates jobs, exports market for donors, used to win pol. support - recipient country gets aid if it agrees to support donor

Question 12

the middle ground - social democratic view

Answer 12

•aid can work but is often inappropriate or inefficient - not an objection to all aid but recognition that much aid it misdirected and abused and a desire to see it used well

Question 13

the middle ground - social democratic view

Answer 13

•aid can work but is often inappropriate or inefficient - not an objection to all aid but recognition that much aid it misdirected and abused and a desire to see it used well

Question 14

examples where aid has not contributed to development

Answer 14

•supports corrupt/undemocratic govs or where money is wasted via inefficiency
•aid used to strengthen armed forces (not helping ppl directly)
•projects that are innap. and do more harm than good
•projects that cause damage to the gov

Question 15

the case for aid

Answer 15

•come main rly from mt - rich world could provide air in the form capital, expertise or tech as a helping hand to those who were behind the road to prosperity and mass consumption
•sachs (2005) argues for a big push of large-scale, focused and intergrated aid to lift developing countries out of pov

Question 16

even though aid has not solved some issues, what are the positives abt it

Answer 16

•may not have solved world pov but have made things better than they would otherwise have been
•collier (2007) estimates that over past 30 yrs, aid has added 1 percentage point to the annual growth rate of counties of the ‘bottom billion’ - sig. as counties would’ve been poorer w/o aid
•aid may not have led to develop. but has stopped situations from getting worse

Question 17

how has bauers view of aid been challenged

Answer 17

•challenged on ethical grounds
•argues that developing countries are responsible for own poverty however it is chance that leads to an in. being born in a developing country - not the in. fault for where they are born
•can be argued on the grounds of natural justice that giving aid is a moral imperative - with it is it helps improve life chances

Question 18

does aid do more harm than good

Answer 18

•depends on type of aid that is offered
•aid that is small-scale, aware of local needs, controlled at a local level, usually given by and ngo can be v pos. however is not going to transform a country on its own
•aid in disaster/emergency can be vital although some has been misdirected and often been restricted to relief rather than est. foundations for a more secure future

Question 19

the debt crisis - origins

Answer 19

•refers to the inability/refusal of indebted countries to pay interests on loans/to repay the original loan - hold back develop. by diverting money and resources
•has origins in 1970s when banks lent money to third world - mt led ppl to believe that if they were helped, poorer countries would quickly develop and begin to catch up w loans being seen as good business for banks and a contribution toward modernisation
•third world counties took the money believing that econ. growth would mean they could pay interest and eventually repay loan
•some lent money went to dictators, spent on arms and some brief develop.

Question 20

the debt crisis - beginning

Answer 20

•recession in 1980s caused richer countries to reduced export markets it third world countries - still had to repay interest in their loans
•many countries went deeper and deeper into debt, borrowing even more money to pay off interest due on earlier loans
•when govs obliged to curtail their spendings, easier to cure health and ed. budgets than to reduce spending on arms and military
•debt then became huge obstacle to develop.

Question 21

debt boomerang

Answer 21

•george (1991) - term to describe the ways in which the debt has a neg. effects in developed world - debt also creating problems for north and action on debt was in interest of north as well as being ethically desirable
•suggests that debt cancellation is actually in interests of those whole money is owed - not chastity or compassion but social and econ. sense

Question 22

how was the debt burden reduced

Answer 22

•highly indebted poor countries initiative (hipc) - allowed debt to be written off provided the countries adopt imf and world bank approved econ. policies

Question 23

what is the main argument for not cancelling the debts

Answer 23

•’moral hazard’ - used in insurance industry referring to when ppl are not held responsible for what goes wrong as a result of decisions they have made - cancelling debate rewards those countries that didn’t but use the money well

Question 24

what is another argument on why not to cancel the debts completely

Answer 24

•banks would probably not loan money to the countries concerned in future
•much if the money is owed to world bank and int - debt cancellation would leave them w limited funds to promote develop.

Question 25

vulture funds

Answer 25

•writing off of debts been hampered by vulture funds - buy debts owed by poor countries at cheap rates and then sue those govs in order to make a profit
•2007 - imf found 11/24 counties in hipc had been sued by vulture funds - total of 1 bil being awarded to vultures

Question 26

trade

Answer 26

•once seen as a rather dry concern for economists but has now been subject to popular debate and progress, increasingly recognised as essential to an understanding of develop.
•least developed countries much less involved in world trade than developed ones - smaller counties often rely on almost entirely on one crop/material and sometimes on exporting to a limited no. of countries - leaves counties and farmers within them in a much vulnerable situation, receive only a tiny proportion of final price of crop/product w main profits being taken by businesses

Question 27

fair trade

Answer 27

•a movement to try and alter the terms of trade so that producers in developing counties receive a higher proportion of the profit
•northern consumer become more aware of it and claim implicit in the term itself that normal free trade is not fair

Question 28

why are the small proportion of businesses in smaller counties still at risk

Answer 28

•prices fluctuate according to supply and demand- if supply rises bcs more countries are producing a particular crop/material, price likely to fall
•changing taste and fashion in north can affect demand
•crops are vulnerable to severe weather conditions and disease - relying on one/limited no. of crops provides no insurance

Question 29

how have developments in southern counties happened in a pos. way

Answer 29

•terms of trade and prices of commodities change - dowden (2006) - chinas rapid industrialisation means that it needs raw materials and some african countries have been able to supply these we demand pushing prices up - causes chinese goods to be increasingly available in african markets and consumer goods have become chalet and more affordable

Question 30

what do mt argue

Answer 30

•developing countries need to become much more involved in internat. trade - one of the ways western counties developed in past so it should work for rest of world too

Question 31

what do dt and radicals argue

Answer 31

•trade is one of the ways in which the north ensures the neo-colonial exploitation of the south
•under colonialism, economies of colonies used for the benefit of colonial power, providing primary products
•despite pol. independence, developing countries remain heavily dependant on export of these - rich world uses dominance in world trade system to ensure that prices that developing world producers get are low - profits from exports will never be sufficient to fund develop. or keep pov. away

Question 32

what do neoliberals argue abt trade

Answer 32

•free trade is fundamental - favour trade liberalisation - opening of national markets to internat. competition
•will in theory ensure that those who can produce goods for which there is a market and at a price that customers are willing to pay will do well

Question 33

what does trade liberalisation include

Answer 33

•removal of protectionist policies in developed world, where there are often tariffs on goods imported from developing world and other barriers e.g. quotas, tech regulations and health and safety standards
•developed countries also subsidise agriculture and some industries, gives adv. in global market
•in practice - developed countries v reluctant to reduce subsidies/allow cheap foreign goods that would undermine own producers
•developing countries have no option but to accept liberalisation

Question 34

what is fair trade abt

Answer 34

•products w fair trade label popular in north - still only cover limited types of products and have only a small share in market
•is an attempt to alter terms of trade to give a fairer deal to producers in developing countries

Question 35

neoliberal opinion on fair trade

Answer 35

•oppose fair trade bcs it interferes w operation of market - argue that it is free trade not fair trade which will reduce pov and improve living standards
•say that fair trade is unfair bev it give privileges to relatively small no. of producers who meet criteria to take part in fair trade schemes
•sidwell (2008) - is an intervention in the market that creates unfair adv. and disadv.