Trade VS aid

Question 1

What efforts have been made to create development in poorer countries? 2

Answer 1

1. Trade use.

2. North aid provision to South.

Question 2

Why is economic growth essential to economic development? 2

Answer 2

Growth increases wealth.

Rise in living standards.

Question 3

Why did economists believe in South industrialisation for economic growth?

Answer 3

Would provide more export goods.
Increased trade - more revenue/wealth.
Rise in living standards.
Assumption that South countries had to go through same process as richer North countries.

Question 4

What does the South industrialisation depend on? 3

Answer 4

1. Adoption of Western-style capitalism - fairer.
2. Economic growth ‘trickling down’ - providing extra money for new industries to be created, more products produced, more trade, more economic growth.
3. Promotion of free trade - IMF strong supporters.
   Neoliberalism idology - set of free-market policies.

Question 5

What is evidence of South industrialisation working?

Answer 5

Singapore, South Korea.
Undeveloped, then rapid economic growth.
Industrialisation - opened up markets.
BUT governments did apply protectionist policies - OPPOSITE to neoliberalism.

Question 6

Why do some economists argue that LECs can never be developed through trade/economic growth? 4

Answer 6

1. Can’t compete in global market - wealth gap too big.
2. Depend on agricultural exports - falling prices.
   Can’t profit from this - rich countries often subsidise their own farmers in WTO trade negotiations.
3. Wealth doesn’t ‘trickle down’ - rich benefits only.
4. Crippling debt - had to accept neoliberal changes of the IMF and World Bank - cuts on health/education.

Question 7

What are the 3 different types of aid?

Answer 7

Bilateral.
Multilateral.
NGOs.

Question 8

What is bilateral aid?

Answer 8

Aid given directly by the government from one country to another.

Question 9

What is multilateral aid?

Answer 9

Aid given by governments to international organisations which use the money to assist programmes in poorer countries.
E.g. World Bank.

Question 10

What is NGO aid?

Answer 10

Distribute aid in a variety of ways.
Mostly charities e.g. Oxfam, which raise money for development projects.
Ensures aid is directed to most in need.

Question 11

What forms of aid are there?

Answer 11

Money.
Goods.
Technical assistance e.g. building up of infrastructure.

Question 12

What is short-term aid?

Answer 12

Given in response to a sudden problem.

E.g. $1.44 billion from UN to Haiti 2010.

Question 13

What is long-term aid?

Answer 13

Long-term development projects.

Helps agriculture, industry, education etc.

Question 14

What is ‘top-down’ aid?

Answer 14

Government directs the operation from ‘the top’.
E.g. building dams to provide irrigation water.
Pergau dam.

Question 15

What are ‘bottom-up’ schemes?

Answer 15

Aka grassroot initiatives.
Funded by NGOs.
Works with local community to bring about change.

Question 16

What are the criticisms of aid?

Answer 16

1. Doesn’t always reach those who need it - corruption.
2. Lack of basic infrastructure - difficult to receive aid.
3. Aid dependency - aid becomes big proportion of national income.
   Aid agencies now hesitant to provide food.
4. Strings attached - recipient has to agree to donor conditions.
   E.g. tied aid - recipient has to spend money on donor goods/services.

Question 17

What is the definition of foreign aid?

Answer 17

“Assistance, in the form of grants and loans given by one government or NGO to another. Which, in the case of a loan must have at least 25% in the form of a gift”.