Unit 4: Poverty And Development Flashcards

Question

What's a Structural Adjustment Programme? (SAP)

Answer 1

Term used to describe the policy changes implemented by the IMF and the World Bank in developing countries Policy changes are conditions for getting new loans from the IMF or World Bank, or for obtaining lower interest rates on existing loans. Conditions are implemented to ensure that money lent will be spent in accordance with the overall goals of the loan.

Answer 2

Use of government revenue collection (mainly taxes) and expenditure (spending) to influence the economy

Answer 3

Process of changing the way taxes are collected or managed by the government as is usually under-taken to improve tax administration or to provide economic or social benefits

Answer 4

Removal or reduction of restrictions or barriers on the free exchange of goods between nations

Answer 5

Price of a nations currency in terms of another currency. An exchange rate this has two components

Answer 6

European imperialism got its start in the 15th century Europeans gained control of coastal cities and of resupply posts along major trade routes New colonies were still being acquired by Europe through the end of the 19th century, culminating in a scramble for the colonies in Africa in the 1890s

Answer 7

20th century: world regions formerly dominated by Europe gained independence, with their own sovereign states participating in the international system Decolonisation continued throughout the mid 1970s until almost no European colonies remained. Most of the newly independent states have faced tremendous challenges and difficulties in the postcolonial era because of their colonial histories

Answer 8

European imperialism got its start in the 15th century Europeans gained control of coastal cities and of resupply posts along major trade routes New colonies were still being acquired by Europe through the end of the 19th century, culminating in a scramble for the colonies in Africa in the 1890s

Answer 9

20th century: world regions formerly dominated by Europe gained independence, with their own sovereign states participating in the international system Decolonisation continued throughout the mid 1970s until almost no European colonies remained. Most of the newly independent states have faced tremendous challenges and difficulties in the postcolonial era because of their colonial histories

Answer 10

Cultural impact - Economic impact - Anti colonial movements -

Answer 11

Believe that far from decolonisation granting independence and sovereignty to many developing nations that their economic policies are essentially dictated to them by developed nations through the institutional framework of the international financial system and the operation of international capitalism.

Answer 12

Used to explain the lack of accumulation in the third world. A dependent country must borrow capital to produce goods; its debt payments then reduce the accumulation of surplus Developed Lenin's analysis of the core and periphery to explain the subaltern position

Answer 13

Skills Gap Narrow Export Economy Problems of inherited borders Corrupt Governance

Answer 14

Foreign capital is invested in a third world country to extract a particular raw material

Answer 15

Local capitalist class which controls a cycle of accumulation based on producing export products

Answer 16

Here the capital is provided externally but production is for local markets - profit goes back to the company

Answer 17

Lack of access to markets Agricultural subsidies in US and EU Lack of teeth from the WTO Lack of competitiveness in the South

Answer 18

General benevolence Right to development Rectification of past injustices

Answer 19

Refers to the transfer of goods or services from one country to another country, motivated, at least in part, by the country aid, multilateral aid is provided by or through an organisation.

Answer 20

Addresses immediate and basic needs usually after an emergency Term is controversial as it assigns altruistic motive to actions that may essentially be self-serving, as aid often comes 'with strings attached' and is not always clearly humanitarian (loans are often counted as aid, for example)

Answer 21

Tend to favour programme aid/budget support for the very reason that the government has more autonomy Argue project aim tends to rely on foreign - imposed and run missions which will not enhance the long term capacity of the nation and be sustainable in the future

Answer 22

Oppose budget support on the grounds that it gives too much autonomy to governments to spend as they see fit. Argue that the government may misallocate the funding through bad governance to areas such as inappropriate technology, white elephant projects, military spending or embezzle it

Answer 23

Aid is an injection of foreign money into the domestic economy which will have to be converted into domestic currency Aid may lead to dependency Aid may simply fund military escalation Aid that has too many conditions defeats the purpose of the aid Aid that has structural adjustment components can undermine domestic chances to grow in the long term Some ODA is still 'Tied Aid' - requires nations to spend money that is given in a particular way

Answer 24

Can help to bridge the Savings Gap Can help to bridge the Foreign Exchange Gap Much ODA comes in technical assistance Aid can improve health and education and help fund investment Aid is crucial when there is an emergency Aid is necessary when the liberal approach fails to deliver poverty reduction

Answer 25

Debt that is owed to foreign ministers and it therefore needs to be repaid in foreign currency

Answer 26

Cost of debt service is budget memory which could be spent on areas such as medicine and healthcare to save lives Debt service costs are stunting long term development prospects Poor nations have been giving much more in debt service to rich nations that rich nations have given to poor nations in aid Bad debts were as much the fault of the Western banking sector (the pushers) as they were of the Third World (the addict) The faster growth of these nations in future will benefit the developed world

Answer 27

Will lead to a moral hazard Debt relief that is conditional is merely a way of neo-colonial powers forcing developing nations to adopt policies that are in the interest of the North It will hurt the balance sheets of Western private sector banks which will directly hurt poor people in the West Debt relief will only allow corrupt governments to embezzle more money Why should a poor nation not have to pay back the loans that it has taken out whereas a rich nation does?

Answer 28

Benefits of foreign investments States remain in control Helps establish long term sufficiency for states

Answer 29

Many of the arguments for it are flawed LEDC states are often abused by MEDC states Role of Multinational Companies

Answer 30

The gap between the industrialised, relatively rich countries of the global north, and the relatively poor countries of the global south is huge The North (including the rich countries of America, Western Europe and Japan plus the former Soviet bloc countries) contains only 20% of the world population yet consumes 60% of world production The South (including Latin America, Africa the Middle East and most of Asia) has 80% of the world population yet consumes only 40% of world production Many argue the divide is growing, as the North continues to absorb more and more of global production, yet the South remains stuck in a poverty trap of low income, leading to low levels of saving, which restricts investment. Low levels of investment in turn restrict the development and progress of firms, thereby restricting income growth and therefore savings etc.

Answer 31

Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs

Answer 32

Focuses on developing strategies which promote development without environmental degradation, exploitation or pollution.

Answer 33

Some oppose sustainable development because it focusses attention on 'needs' thereby reflecting concern for basic human needs such as reducing poverty, rather than the usual economic mantra of satisfying economic 'wants'. Criticised by those who feel that sustainable development restricts economic growth and human development Regarded as a luxury that only the wealthy can afford, and which hinders the development of the poorest people on the planet

Answer 34

Sustainable development has won support from a number of groups, such as environmentalists who are more concerned with tackling problems such as pollution, climate change, and threats to habitats Also won approval from those who fear present patterns of economic and population growth are unsustainable and that the Earth is close to its 'carrying capacity' Overall sustainable development has become popular with the political left wing, with anti-capitalists and the environmentalists Useful, as it could cost some of the richest firms a lot of money if radical concepts, such as the idea of measuring the 'carbon footprints' of individuals becomes more common practice

Answer 35

'Between country' inequality is no longer growing - poverty reduced dramatically in some countries eg China Up until recently sub-Saharan Africa has been the exception to the general trend of worldwide economic progress - been caught in a poverty cycle often exacerbated by the link between poverty and disease There is growing evidence that within-country inequality has generally been growing - been the case across the USA, Western and Eastern Europe and in Latin America and developing world

Answer 36

A situation suffered by people who do not have the money to buy food and satisfy other basic material needs

Answer 37

Transformation of traditional subsistence economies defined as 'backward' into industrial, commodified economies defined as 'modern'. Production of surplus. Individuals sell their labour for money, rather than producing to meet their families' needs

Answer 38

The possibility of unlimited economic growth in a free-market system. The market is the solution and will lead to long-term equilibrium. Any obstacles to development are 'internal' to the society. Economies would reach a 'take-off' point and thereafter wealth would trickle down to those at the bottom. Superiority of the 'Western' model and knowledge Belief that the process would ultimately benefit everyone Domination, exploitation of nature

Answer 39

Economic growth: GDP per capita - industrialisation, including of agricultural

Answer 40

Top-down Reliance on 'expert knowledge', usually Western and definitely external Large capital investments in large projects Advanced technology Expansion of the private sphere

Answer 41

A situation suffered by people who are not able to meet their material and non-material needs through their own effort

Answer 42

Creation of human well being through sustainable societies in social, cultural, political and economic terms

Answer 43

Sufficiency The inherent value of nature, cultural diversity, and the community-controlled commons (water, land, air, forest) Human activity in balance with nature Self reliance Democratic inclusion, participation, for example, voice for marginalised groups, e.g. women Local control A view that there are 'structural asymmetries' between developed and developing countries and that the poverty of the South is 'caused' by the North

Answer 44

Fulfilment of basic material and non-material human needs for everyone; condition of the natural environment Political empowerment of marginalised

Answer 45

Bottom up Participatory Reliance on appropriate (often local) knowledge and technology Small investments in small-scale projects Protection of the commons

Answer 46

Growing debt crisis in the developing world Ideological shift that had occurred as a result of the collapse in the early 1970s of the Bretton Woods system and the emergence of the so-called 'Washington Consensus'

Answer 47

Trade is a long-term basis for international cooperation Trade allows developing countries to retain their dignity whilst aid might be seen as patronising and embarrassing Trade allows a fair impression of the international order to be created Aid can sometimes give the impression that it is given without too much concern about corruption or without moral judgement. It may influence developing world expectations of the developed world and engender a dependency culture Trade provides developing countries with an important basis for their own improvement. Increasing trade, for example, can focus attention on such things as good governance, a stable currency and internal security Aid money is often misspent - by imposing solutions from outside it favours big projects Countries and people naturally want to trade

Answer 48

Associated with the 'Washington Consensus'

Answer 49

Privatisation Trade liberalisation Deregulation Tax reform to promote enterprise Market determined internet rates

Answer 50

Lack of access to markets - when developing countries export to developed country markets, they often face tariff barriers that can be as much as 4 times higher than those encountered by developed countries Agricultural subsidies in US and EU - make it difficult for farmers in poor countries to compete WTO has institutionalised agriculture injustices - rich countries talk about cutting export subsidies but they often demand greater access to poor country markets in return Lack of competitiveness in the South - poorest developing countries struggle to gain from trade if forced to trade under free trade terms as poor countries don't have huge stocks of exports waiting to be shipped to rich countries

Answer 51

The HIPC programme has been subject to conditionalities similar to those often attached to IMF and World Bank loans, requiring structural adjustment reforms, including privatisation of public utilities, including water and electricity To qualify for irrevocable debt relief, countries must also maintain macroeconomic stability and implement a Poverty Reduction Strategy satisfactory for at least one year. The Multilateral Debt Relief Initiative (MDRI) is an extension of the HIPC. The MDRI was agreed following the G8 Gleneagles meeting in 2005. It offers 100% cancellation of multilateral debts owed by HIPC countries to the World Bank, IMF and African Development Bank.

Answer 52

Debt servicing uses up scarce foreign exchange which could be put to more worthwhile development goals Cancellation lifts the burden of servicing unpayable debts, often incurred by long gone dictators, so that funds can be devoted to more worthwhile purposes like education and access to clean water One of the results of debt cancellation agreed at the 2005 G8 Summit has been free education for all children in Ghana

Answer 53

Corrupt governments can simply steal the money that has been saved or divert it into military spending Risk that cancellations just encourage improvident spending in the expectation that debt will be written off later Current form of debt cancellation practiced by the IMF and the World Bank under the HIPC initiative is far from beneficial. Tough conditions are attached whereby countries have to follow free market reforms Conditions are too strict and are a form of neo-colonialism - a means of remodelling economies to suit the interests of Northern multinationals and exporters

Answer 54

Trade is a long term basis for international co-operation Trade allows developing countries to retain their dignity whilst aid might be seen as patronising and embarrassing Trade allows a fair impression of the international order to be created Trade provides developing countries with an important basis for their own improvement. Countries and people naturally want to trade

Answer 55

Aid is linked to need not the ability to engage in trade Aid can in theory be more evenly distributed and can be targeted against the ability to compete in a trading marketplace Aid allows for money to be effectively allocated against need, aid may be targeted against specifically identified groups or areas on the basis of need Without foreign aid developing countries are not able to develop this kind of support, and so cannot participate effectively in international trade

Answer 56

North clearly does exercise great power over many Southern economies, especially as a result of globalisation Northern multinationals control a large proportion of the economies of many southern countries and arguably they take an unfair share of the profits generated, which could otherwise have contributed to national development Problems of the South are also worsened as a result of unfair terms of trade for its exports Problem is made worse because the poorest Southern countries cannot even protect their own markets because of pressure from Northern dominated international organisations - especially the IMF and World Bank Other elements of neo-colonialism include 'cultural imperialism' - the North's domination of advertising and entertainment media which instils a desire for Northern products and indirect political control through aid or military support for favoured regimes Neo-colonialism replaces the direct exploitation of colonialism with less direct but equally damaging forms of exploitation, and that this causes poverty of South

Answer 57

Not all the South's problems can be blamed on the North. Obstacles to development are imposed by many countries' own political systems and policies Some Southern countries have been able to make dramatic progress within the existing global trading system A number of Southern countries have succeeded in achieving economic growth through trade Though multinationals are often criticised, the fact that many Southern governments are keen to attract their investments suggests that they are seen as beneficial Flow of investment between North and South is no longer just in one direction Shift in global economic power has been further accelerated by the 2007-09 financial crisis, which the Southern BRICs coped with much better than the Northern countries Growing Southern trade - Northern MNCs are increasingly challenged by ones from the South Poverty also caused by natural disasters, population increase and the devastating effects of AIDS

Answer 58

Outdated = Alternative/Orthodox Collapse of the Soviet Union Within country inequality Tiger Asian Economies; China, South Korea

Answer 59

Not Outdated = Dependency/ Neo-colonialism North still dominant; US, EU Trade Triangle IMF + World Bank; US President = WB, EU President = IMF

Answer 60

'Within Country' inequality has generally been growing - been the case across the US

Answer 61

'Between Country' inequality is no longer growing - poverty reduced for example in China

Answer 62

Orthodox view: States cooperate Spread of technology - R+D Transport/Communication Trade

Answer 63

Dependency Theory: Washington Consensus MNCs + TNCs exploit of workers Enclave Economy Resource Crisis

Answer 64

Top-down reform Problems develop within countries Free trade

Answer 65

Used to explain the lack of accumulation in the third world. A dependent country must borrow capital to produce goods; its debt payments then reduce the accumulation of surplus