Trade and Aid Flashcards
What is long term or development aid?
support for developing economic, environmental, social or political aspects of a country or to address underlying socio-economic causes, which might lead to a crisis or emergency.
Usually financial but could take the form of advice or trained personnel and given by large agencies such as Governments, NGO’s or charities.
Long term.
what aims do fair trade have for producers in LEDCs
better trading conditions fewer middle men better financial outcomes higher percentage of price received empowerment securing rights developing knowledge and skills to improve their lives
what is tied aid
when one country donates money or resources to another but with conditions attached These conditions may be viewers as being in the HICs favour eg Pergau Dam Malaysia 1991 £234 million in aid towards the construction of a hydroelectric dam to describe trade deals with Malaysia
describe bilateral aid
from one government to another usually largest share of a country’s aid often directed according to strategic political considerations as well as humanitarian reasons
what is a visible import or export
Visible imports are products that are bought and brought into the country that are concrete or can be seen or touched (raw materials, products).
For example, food, raw materials, machinery, cars. Tend to be found in LIC countries with often large amounts of undeveloped natural resources, or the attraction of cheap labour and lack of regulation e.g. flowers in Kenya.
how are water shortages an economic disadvantage of tourism?
caused by tohrist complexes hotels and golf courses using large amounts up to 500 litres per tourist per day may lead to local farms and villages not having enough
what are the overall problems with aid?
dependency undermining local employment structures delaying governments getting to grips with the economy inappropriate large scale schemes uncertainty possible corruption etc
explain how locational advantage affects global trade
Proximity to major host markets. For example, tourism in France has flourished due to the large populations of neighbouring countries that can quickly, cheaply travel.
France is a developed HIC with widespread FDI and domestic investment, that benefits from low budget airlines, subsidised rail fares etc, something not found in LIC countries.
Situated along a trade route/shipping lane. For example, Singapore is situated along the trade route between India, China and the Pacific Ocean.
This means a reduction in transportation costs (no foreign tariffs) and reduced dependency on other countries for favourable trade conditions.
explain how the WTO works?
they are empowered by the organisation to enforce its decisions by imposing trade sanctions against countries that have breached the rules highest body of the WTO is the Ministerial Conference; meets every 2 year setting for negotiating global trade deals known as trade rounds (aimed at reducing barriers of free trade)
describe multilateral aid
assistance provided by governments to international organisations eg world bank, or UN then used to reduce poverty in developing nations
arguments against the provision of aid to LICs?
aid can increase dependency on donor counties where aid is not a gift but a loan; may struggle to repay corruption may lead to local politicians using aid for their own means or for political gain; it may not reach the people and communities it was aimed at tied aid can be used to put political or economic pressure on the receiving country it may be a condition of the air that the projects are run by foreign companies or that a proportion of the resources or profits produced will be sent abroad some aid projects do not benefit smaller communities and some development projects may lead to increased costs of basic food and water
quote about the advantages of developmental aid
give a man a fish you have fed him for today teach a man to fish you have fed him for a lifetime
why does trade imbalance cause countries to get into debt
trade imbalance (value of imports>value of exports over time) e.g. countries that are decolonized look to develop or HIC countries with a trade deficit importing more than they export/ large public spending under a left leaning government requires borrowing e.g. GB.
what social and political problems does national debt create?
social: divert resources away from social provisions most affected poor especially women and children cut in benefit raised pension age political: government instability public unrest: austerity measures structural adjustment programs
what are the main benefits of the WTO?
expanding world trade helps raise global living standards democratic inthst it’s rules were written by its member states many of whom are democracies who also select its leadership
what is multilateral aid
given by a donor country to the international organisation such as the World Bank who then used the aid to assist developing countries
what is developmental aid?
support for developing economic environmental social or political aspects of a country addresses underlying socio economic causes which may lead to crisis or emergency usually financial could be advice or trained personnel large agencies governments charities LONG TERM
negative aspects of trade
dependency on primary products fluctuating market prices competition product innovation unforeseen events eg climate hazards
what is relief aid
short term, for emergency situations, saves lives, reduces suffering and attempts to maintain dignity of people,
free and from a variety of sources - individual to government and international organisations
Protectionism
The institution of policies (tariff quotas regulations) that protect a country’s industries against competition from cheap imports
example of fair trade operating with TNC
supermarkets and tncs such as cadbury’s give fair trade farmers access to global markets
role of the WTO
deals with global rules of trade between countries and trade blocs functions to ensure trade runs smoothly predictably and freely achieved this by negotiating trade agreements, encouraging liberalisation (LEDCS) and by dealing with trade disputes
how many member countries does the WTO have
153 in 2008
what is Charitable aid
Funded by donations from the public through organisations often NGOs Some will raise money to use for the aid programme others are more involved with the management of air projects, ensuring that aid is effectively used and distributed
what is the nature of Fair Trade
Fair Trade applies to a small, but growing number of products, from tropical fruit to cotton clothing, traded by LEDCs with MEDCs. It covers key products such as tea, coffee and sugar
producers are rewarded commensurately for their labour, and the middleman is either cut out or receives modest reward for his services.
It is a small sector within the market for each product, e.g. cocoa, but is growing strongly as awareness grows of some of the effects of TNCs, etc. on individuals, communities and the economies of LEDCs.
why are HICs arguably not to blame for odious debt?
the figurehead of the country mobutu has the right to the money choice how to spend it problematic to assert blame to Hics although politically motivated prevented brutish soviet regime from gaining valuable resources likely worse than mobutu
Trade surplus
When the value of a country’s exports exceeds the value of its imports
What is debt relief?
A cancellation of debts owed by developing nations to industrialised nations or institutions such as the World Bank This is done in order to allow the government to shift funds towards social development
What is microcredit?
Involved tiny pond and financial services to help the poor - mostly women - start business and escape poverty
Trade deficit
When the value of a country’s imports exceeds the value of its exports
explain how historical factors negatively affect global trade
the poorest countries in the world are former colonies of european Colonial expansion by European countries involved the colonies playing a subordinate role, with only limited benefits and primarily distorted economies.
The colonies then become trade dependent on their coloniser, putting them in an adverse position in terms of global trade - goods sold at a higher cost back to the colony
colonialism can also leave the country in ruin and disorganisation
e.g. Zambia post-independence in the 1960s, was left with few trained and educated Zambians capable of running the government, and an economy dependent on foreign expertise.
This caused mismanaged and inefficient governance
Trade dependency
When a developing country is so reliant on its advanced trading partner that any changes in their economic policy or economic condition could have a severe effect on the developing country’s economy
describe LIC employment structure
heavily dependent on agriculture and subsistence farming unemployment very few high paid jobs limited tertiary jobs in teaching and nursing primary product depends makes them very vulnerable to world market
describe failed bilateral aid
peragu dam malaysia top down tied aid thatcher committed 234 million to build dam despite being found not cost effective by ODA received arms deal worth £1.3 billion
what is dumping
the selling by s country of large quantities of a good in another country, at w price lower than the production cost, or at a price significantly below the price in the domestic market
example of a positive and negative colonial trade relationship?
Positive e.g. Singapore (established infrastructure legal and political e.g. independent judiciary, piped water, transport). Mauritania was made independent from France, but they remained the biggest trading partner.
Negative e.g. Zambia post-independence in the 1960s, was left with few trained and educated Zambians capable of running the government, and an economy dependent on foreign expertise. This caused mismanaged and inefficient governance.
why do patterns of global trade change
emergence of NICs Liberalisation and growing role of supply chains changing trade barriers action of trade blocs and agreement s technology led decreases in transport and communication costs
what are the most common trade agreements
free trade agreements which reduce or eliminate tariffs quotas and other trade restrictions in
what is a quota
an import barrier that sets a physical limit on the quantity or value of goods that may be imported into a country
Arguments against the provision of aid to LIC/MIC?
Aid can increase dependency of countries on donor countries where aid is not w gift but a loan they may struggle to repay Corruption may lead to local politicians using aid for their own means or for political gain; it may not reach the people and communities it was aimed at Tied air can be used to put pressure on the country; a condition of the air could be that projects are run by foreign companies or that a proportion of the resources or profis are produced will be sent abroad
describe HIC employment structure
eg UK between 1840 and 2011 employment went up 60% in quaternary areas post industrial societies very few manufacturing mostly quaternary cheap LIC and MIC for secondary robotics replace human labour in manufacturing
invisible trade
transactions that occur across borders or between countries for services that can’t be seen or touched eg payments for services such as tourism or education, remittances, financial transfers beteeen companies
Tend to be found in HIC countries with greater skills due to universal education programmes, giving rise to a better-quality labour force e.g. magic circle law firms.
what is protectionism
when a trading nation introduced policies that aim to restrict the flow of imports into a. country and or create an artificial advantage to exporting firms
arguments for the provision of aid to LICs?
emergency aid can save lives and help rebuild communities livelihoods and housing provision of medical training medicines and equipment can improve health and standards of living aid for agriculture can help improve farming techniques increase food production and improve the quality and quantity of food available developing clean water and sanitation to improve health and living standards aid for industrial development can create employment and improve infrastructure in transport such as roads and railways supporting countries in developing their natural resources and power supplies
explain how resource endowment affects global trade
countries with large reserves of raw materials (iron coal oil) , giving the country the tax base to be able to improve education, meaning invisible trade respectively improves in quality.
This explains the wealth of Canada, who’s wealth is built on the endowment of timber and minerals.
This does require initial investment, something that is impossible in a country plagued with corruption.
For example, the country richest in natural resources – DR Congo, famed for its diamond, gold, bauxite – is also the poorest in terms of development due to its long-standing history of slavery, corruption and colonialism.
how does the WTO encourage trade?
lowering trade barriers discouraging unfair practises - export subsidies or dumping products cheaply to gain market share LEDCs get advice, time to adjust and some privileges
what are the advantages of trade over aid?
Compared on the other hand with the argument that trade (free fair or regulated) may promote economic independence, provide income, support local employment and be more appropriate
define trade agreement
a tax tariff and trade treaty between countries
describe MIC employment structure
Singapore rise in manufacturing FDI from TNCs or tertiary rise eg india domestic companies develop greater agricultural investment
What is international aid?
The giving of resources food money goods technology By one country or organisation to another, poorer country Objective is to improve the economy and quality of life in the poorer country
describe the exploration stage of butlers model
exploration stage when a small number of tourists are attracted by a new location at a minimal impact on the local community there are no services or facilities developed specificslly for tourists
explain how trade agreements affect global trade
the level of economic integration depends on the specific type of trade policies adopted by the trade blocs typically the benefits and obligations of the trade agreements apply only to their signatories
EU single market, customs union e.g. Romania’s economy has grown by 7% since the country asked to join the EU.
60% of Mauritania’s exports and imports – part of an agreement with more than 70 countries including Africa, Caribbean and Pacific.
opposition to the WTO?
WTO is too powerful, it can effect compel sovereign stated to change laws and regulations by declaring these to be in violation of free trade rules The WTO aid indifferent to the impact of free trade on workers rights child labour the environment and health Lacks democratic accountability in that its hearings on trade disputes are closed to the public and the media Run by rich countries benefiting themselves and large TNC; this harms smaller countries which have less negotiating power. Less weight on problems of smaller countries eg rich countries have not fully opened their markets to produce from poor countries
What is debt?
external debt - the total debt in a country owed to creditors outside the country money owed to commercial banks, other governments or international financial institutions debtors can be the government, corporations and private households
example of how standard of living is improved by fair trade
36% of profits improving productivity CANN cooperative in the ivory coast 16% spent on farm improvements 19% on shared facilities
What is niche tourism?
Tourism that deals in a specialised product
example of LIC economy
Chad 80% employee in primary sector
what advantage does fair trade have for consumers?
ethical satisfaction as fair trade campaigns for change raised awareness about fair trade issues achieved through fair trade
describe relief aid
humanitarian aid purpose is saving lives reducing suffering respecting human dignity usually employed after events such as natural disasters or humanitarian crisis eg civil war or famine short term eg RED CROSS NGO
why are HICs to blame for odious debt?
immorally lending money banks know of the irresponsibility of the leaders eg apartheid in south african government, that would fund policing prisons or security apparatus enforcing racist “second class status” not only irresponsible, politically motivated eg mobutu the congo leader squandered $8 billion in personal swiss banks, $2 million trip to disneyland, castles in spain people are impoverished and suffering politically didn’t want the DR Congo eg gold or dimaonds fallen into Soviet hands HICs propped up a corrupt regime
