Trade & Aid

1) Outline the benefits of world trade as a means of ensuring economic development

Economic development requires economic growth and it is believed by some that world trade can promote this growth. If there is an increase in trade beyond a countries boarder, more revenue can flow in to the country, promoting increased wealth. Increased revenue is thanks to the ability to find new markets, which can also extend a products life. For LEDCs, selling goods to MEDCs allows them to tap in to their ready-established economies. Economic growth often trickles down providing extra money and resources for new industry to be established, with more goods produced, there is more trade thanks to this amplifier effect. This itself can reduce dependency on established markets as the country economically develops trade can establish within the country. World trade also arguably increases competitiveness within industry, which increases sales itself.

2) Some economists doubt that trade is a realistic pathway for the development of the world –why?

World trade is widely criticised, especially when referring to poorer countries which are compounded by other problems such as HIV/AIDs, war and drought. It is argued that the polarisation in wealth between LEDCs and MEDCs keeps them paralysed, for they cannot afford they industrial and technological investment as the same as MEDCs. Furthermore, poorer countries are dependent on agriculture as their main resource, prices for which have been falling. It is actually impeded by schemes in MEDCs such as the EUs Common Agricultural Policy, which subsidises the sector within the grouping of nations. It is also claimed that the wealth doesn’t always trickle down and is confined to the rich members of society. Debt has also placed these countries in a difficult position and to gain help from the IMF and the World Bank, they often have to adopt their policies, such as cuts on spending and education, known as neoliberalism.

3) Describe the different ways in which aid can be given.

There are three main ways through which aid can be supplied:

Bilateral aid – aid given by the government of one country to another.
Multilateral aid – aid given by governments to international organisations which use the money in programs in countries in need. Examples include the World Bank and UNESCO
NGOs – ‘Non-Governmental Organisations’ – Many of these are charities such as Oxfam that raise money for various projects directing aid at those who need it most.

There are also different types of aid:

Short-term aid – This is given as a sudden response to a problem
Long-term development projects – these can help agriculture, industry, energy supplies, infrastructure, education and medical facilities
“Top down” aid – a responsible body directs operations from the top, such as building dams for irrigation water or HEP
“Bottom up” schemes – “grassroots initiatives”, often funded by NGOs, working closely with local communities and using local ideas and knowledge to bring about change.

4) Why is aid often criticised as a means towards development?

Aid is often criticised as a means towards development, aid dependency can be created when aid becomes a significant part of the national income. This is why aid agencies do not deliver aid for extended periods of time where possible. Aid often doesn’t even reach those who need it and often isn’t used effectively. Corruption is also problem in a lot of receiving countries. A lack of infrastructure in some countries also makes it difficult for aid to be used effectively. Aid also often comes with strings attached, such as tired aid, where the receiver has to spend money on goods from the donor country.

5) In your opinion what would be the best way to help impoverished regions develop?

I feel that many problems arise from a country’s want to develop before they have fixed problems within their society and infrastructure. Health issues such as HIV/AIDs need resolving before the country can develop economically, with people’s health being key to them being able to be economically active. I feel this could be achieved with the careful allocation of aid. I feel that bottom-up schemes are the best option to make sure that those who need aid receive it. Agriculture isn’t the best way to develop at the moment, for they are limited by agricultural trade within national groupings such as the EU being subsidised. I therefore feel that the grouping of MEDCs are detrimental to LEDCs and contribute to polarisation and whilst these exist, they are helping there own, but impeding undeveloped nations. Perhaps dealing with world trade and demolishing global trade barriers would be more effective. I feel that trade is useful, yet unsustainable such as the collapse that the Asian Tigers saw when they developed too fast. I feel that the traditional import substitution would be a better option, so their markets are not dependant on foreign ones when they do indeed globalise. Therefore, I feel that trade with them should be minimalized, also to prevent the exploitation of workers from an ethical basis. We should also be very careful, by giving them loans we strap them with inevitable debt that they may be unable to repay, we should simply try and aid only with health, social and infrastructure issues.

Short term aid in Haiti after the 2010 earthquake

Why aid was needed

The 2010 Haiti earthquake was a catastrophic magnitude 7.0 Mw earthquake.
Haiti is the poorest country in the Western Hemisphere.
An estimated three million people were affected by the quake; the Haitian government reported that an estimated 316,000 people had died, 300,000 had been injured and 1,000,000 made homeless.
The government of Haiti also estimated that 250,000 residences and 30,000 commercial buildings had collapsed or were severely damaged.
Damage to infrastructure in the 2010 Haiti earthquake was extensive. 90% percent of the buildings in that city had been destroyed and Léogâne had “to be totally rebuilt.”
Half the nation’s 15,000 primary schools and 1,500 secondary schools were severely damaged or destroyed

The nature of the aid given

Appeals for humanitarian aid were issued by many aid organizations, the United Nations and president René Préval
Many countries responded to the appeals and launched fund-raising efforts, as well as sending search and rescue teams. The neighbouring Dominican Republic was the first country to give aid to Haiti, sending water, food and heavy-lifting machinery.
The hospitals in Dominican Republic were made available
The Dominican Red Cross coordinated early medical relief in conjunction with the International Red Cross. The government sent eight mobile medical units along with 36 doctors including orthopaedic specialists, traumatologists, anaesthetists, and surgeons.
Other nations from farther afield also sent personnel, medicines, materiel, and other aid to Haiti.
The American Red Cross announced on 13 January that it had run out of supplies in Haiti and appealed for public donations. Giving Children Hope worked to get much-needed medicines and supplies on the ground. Partners in Health (PIH), the largest health care provider in rural Haiti was able to provide some emergency care from its ten hospitals and clinics all of which were outside the capital and undamaged.
In the U.S. Haitians were granted Temporary Protected Status, a measure that permits about 100,000 illegal alien Haitians in the United States to stay legally for 18 months

How this aid affected people positively and negatively

Initially, aid had been piling up at the airport due to a lack of trucks and people to distribute it. Water and food have taken days to arrive and there is not enough to go around.

Rescue teams from around the world took up to 48 hours to arrive in Haiti due to the problems at the airport. Local people have had to use their bare hands to try and dig people out of the rubble.
Despite this $2.5 billion has been pledged to help them

The Akosombo Dam in Ghana– A Top Down Scheme

Why aid was needed

Population 21 million
8 million in poverty
45% live in towns/cities
Most villages- no electricity or water
River Volta
60% of workforce are farmers – soil overused and ruined
Reliant on cocoa crop

The nature of the aid given

“Top down” aid – a responsible body directs operations from the top.
Funded in part by the International Bank of Reconstruction and Development (World Bank), the United States and the United Kingdom – and is hence part subject to multilateral aid and bilateral aid.
The construction of the Akosombo dam was intended to encourage the establishment of new industries, stimulate agricultural development, and to provide opportunities for fishing and increased water transportation.

How this aid affected people positively and negatively

Irrigation to farmland
Renewable energy source
Brought tourism
Dam provides hydroelectric power
80,000 people had to leave their homes
Ghana had to borrow $1 million
Have to repay loans to USA and World Bank
4% of Ghana is under the lake
Most rural villages still have no electricity
The lake was expected to provide water for irrigation treatments, but agriculture in the resettlement areas remains marginal, with the only irrigation projects being taken by farmers on a small scale.
The hydroelectric power produced by the dam was supposed to provide a reliable source of energy for large industries as well as export power to Togo and Benin, but in the early 1980’s and early 1990’s, very low water levels due to drought brought a halt to energy exports and interrupted industrial production.
The lake has in fact hindered transportation and trade between north-eastern and southern Ghana. Attempts to develop water transportation have had few results.

Fishing has been more successful, although only 10% of the country’s fish consumption comes from Lake Volta.

Farm Africa in Tanzania – A Bottom Up Scheme

Why aid was needed

The majority of people in Tanzania live in rural areas where their main economic activity is agriculture.
Around 57% of the households in Tanzania cannot meet their basic food and non-food needs.
The Tanzania Human Development Report of 2003 revealed that about 39% of districts are food insecure.
Higher and sustained agricultural growth in Tanzania is imperative to reduce overall poverty levels.
A reliance on selling timber products such as firewood and charcoal to supplement insufficient agricultural production is causing deforestation and environmental degradation in many forest areas.

The nature of the aid given

A “Bottom up” scheme – “grassroots initiatives” working closely with local communities and using local ideas and knowledge to bring about change.
Participatory forest management: With support from FARM-Africa, forest communities are turning their traditional activities such as raffia-weaving and honey production into viable ways to earn a living. No longer reliant on illegally felling trees to make charcoal and firewood to sell, communities are working with local governments to develop formal forest management plans. These plans will ensure that resources are used sustainably and the habitat is protected for future generations.
Smallholder development: Many people in Tanzania are smallholder farmers, reliant on the crops they grow and the livestock they keep to survive. In partnership with the Tanzanian Government FARM-Africa is helping schools to teach children practical farming skills to share with their families and improve farming practices in the communities where they live.
Pastoralist development: Our mobile outreach camps enable FARM-Africa to work directly with remote pastoralist communities. Communities can maintain their traditional way of life while diversifying their means to earn sufficient income to support their families. Support to set up savings co-operatives is increasing the availability of credit to invest in small enterprises. At the same time, community leaders are learning about their rights to the land they live on, and how to use this knowledge to secure their communities rights to work this land both now and in the future.

How this aid affected people positively and negatively

They are being taught long term skills that will last for life.
The Tanzania Participatory Forest Management Project is helping forest communities to build upon their traditional activities like raffia weaving, turning them into profit-making enterprises.

The Agricultural and Environmental Education Project is bringing agricultural education to rural populations in the districts of Hanang and Babati by equipping teachers to offer practical lessons in livestock care and crop cultivation.