‘Countries at very low levels of economic development face such a huge challenge that they cannot hope to address them without the assistance from the rest of the world’ To what extent do you agree with this view? [40]
In this essay I shall try and explore if countries of low levels of economic development; LICs, can only develop if they receive aid from already developed countries; HICs. I shall be weighing up both the benefits of aid and it downfalls, as well as the possibilities presented through trade alone. Is it easier for an LIC to develop through aid or by letting itself trade its way forward?
With two thirds of the world being made up by LICs, economic growth, the increase in output of goods and services that a country produces
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LICs fail to act upon the aid in order to develop but instead many see it as a way to keep afloat. Why put the time, resources and effort into developing when you will always be bailed out by these HICs. Another problem associated with aid is the idea that an LIC can receive too much of it. As free ‘aid’ such as food and clothing comes in, LICs citizens, instead of purchasing these commodities, simply pick them up for free. This ‘dumping’ of goods leads to unemployment as markets are forced to close down due to the option of getting their produce for free instead.
With failures such as these it’s clear to see why many opted instead to trade with LICs in order to cause some sort of knock on effect. LICs are often provided with trade rather then aid due to modernization. Essentially this consists of two key elements, the first being an increase in international trade and the second being a process of intensive industrialization to help provide goods for export. In effect, the developing countries were being encouraged to use the same kind of model that Western HICs had used to develop many decades ago. These modern socialist ideas of trade and economic growth took hold and became known as neoliberalism. This concept consisted of the idea that free trade is essential for economic growth, so markets should be as open as possible. This economic
Underdeveloped countries need help from the privileged nations, but it is not mean that all of them should become rich countries’ dependents. On the other hand, the developed countries could support them with technology, quality control and new product development. Based on the aided information and technology, the developing countries could get better future development path. Third, the capacity of the lifeboat is misestimated. Although the poorer countries have larger population, rich nations obtain the majority of the world’s fortune and resources. In that case, rich nation’s supporting capacity is definitely much larger than that of the lifeboat, and these developed countries have the great ability to help more people in the world.
After Zambia gained political independence their economy was doing better. Their economy was surrounded around their primary natural resource, copper. As copper sales went up, new medical buildings and schools were built, they had a promising textile industry and things were looking up. Until an unexpected rise in the price of oil in tandem with the dropping prices of copper forced Zambia to borrow from the IMF and world banks at extremely high interest rates. Soon Zambia found itself in a mountain of unpayable debts and to repay creditors, spending was cut to education and health and other infrastructure projects. Eventually all of the progress they have made goes to waste as it can not be maintained. Foreign countries currently dictate the economic policy via structural adjustment, i.e. policies that “should” increase revenue and allow them to pay the loans off. This inevitably leads to a country that is so dependent on foreign aid because their own industries have been destroyed by foreign influences.
However, the aid has some drawbacks which include some of the policies not being practical and occasionally being too political which makes the targeted poor people more vulnerable. Also governments receiving the aid could be partial which can also result in uneven and biased distribution of the aid which doesn’t solve any problems.
Throughout history, many have debated about whether a wealthier country (developed) should help out a poor, less developed countries. “The U.S. disbursed $33.2 billion—$19 billion in economic assistance to 184 countries and $14.2 billion in military assistance to 142 countries.”(Forbes) Is it beneficial for a more developed nations to help out a less developed country?
WORLD BANK: governments play an important role in development, but there is no simple set of rules telling them what to do.
Following World War II, economic policies were marked by two major trends. On one hand, industrialized economies gradually removed trade barriers. These policies were based on the idea that free trade is not only a factor for economic prosperity of nations, but also for the promotion of peace. On the other hand, economic policies of many developing countries with the exception of few countries in Southeast Asia have been conditioned by the belief that the key to development rests in the establishment of a powerful manufacturing sector, and that the best way to create such an area was to protect local industries from international competition through substitution imports policies.
strengthening of the global partnership for development. Buffeted by economic forces outside their control, smaller economies
After Watching The Voice of Ile a Morphil It can be concluded that developmental aid can be helpful in small doses but once brought onto a larger scale it can hurt the developmental country becoming a centripetal force. The reasons for this include the traditions of the cultures, the knowledge of the people regarding the use of this aid, and the underlying cause of the aid.
Riddell, Roger C. 2007. Does Foreign Aid Really Work? 1st ed. OXFORD: Oxford University Press, USA.
One of my main arguments being how people do not believe that foreign aid helps, meaning they stop donating all together, creating immorality. This idea is supported in Banerjee and Duflo’s Poor Economics; they discuss the general reaction when faced with a major issue like poverty. Generally, our first instinct is to be generous and then our second thought is that there is no point to our generosity. Banerjee and Duflo are able to describe the general feeling that “our contribution would be a drop in the bucket, and the bucket probably leaks” (Banerjee and Duflo, 2). Regardless of the fact Banerjee and Duflo are trying to fight the assumption that we cannot do anything to help, it does not change the fact that this is the common belief when it comes to large issues like poverty. While I still believe that the frustration with inequality and poverty breeds immorality, I now believe that the bigger issue is on the global scale. In his book Encounter Development, Escobar makes the point that “development was – and continues to be for the most part – a top-down, ethnocentric, and technocratic approach, which treated people and cultures as abstract concepts, statistical figures to be moved up and down in charts of ‘progress’” summing up the immorality created by development thinkers who are there to “help” eradicate poverty (Escobar, 44). The inequality between the first world and the third world
Unprecedented increases in living standards came with large increases in income inequality, both between countries and between individuals (p. 167). Too much inequality will create a wealth and power imbalance that stymies growth and development. Similarly, his acknowledgement of the fragility of the successes achieved in the developed world are prescient; there is nothing to say that the alleviation of poverty, deprivation, and poor health will continue forever, and any number of threats – including climate change, political failures, epidemics, and warfare – could bring it to an end. However, in the final chapter, titled “How to Help Those Left Behind”, his arguments are far less compelling. Deaton’s perspective on foreign aid and its efficacy is narrowly defined, and his claim that foreign aid is doing more harm to developing economies than good does not consider development successes that occur on the
The Bottom Billion by Paul Collier discusses why the poorest countries are failing and then offers some insights and solutions to the problem. He says the four major problems in developing nations are: conflict, natural resources, bad neighbors, and bad governments. The conflicts are usually civil wars which have huge costs and the situation just becomes worse the longer the conflicts drag on. Collier states that countries rich in natural resources are often worse off than countries that are not, he attributes this problem to several different factors. One of the factors is that the resources open the possibility for conflict over the resources. Another factor is that if a country strictly focuses it’s on a specific natural resource then the other resources and industries might get forgotten and lose value. Being landlocked with bad neighbors can also be a large problem because it makes it almost impossible to be a part of world trade, so these landlocked countries have to depend on their neighbors for most of the trade and materials. A bad government can also be very destructive to a country’s economy, if they create unreasonable and restrictive policies. The smaller countries are also at a disadvantage because it is hard for them to get any investors, because the investors would much rather invest in well-known countries like India or China. After Collier stated all the problems he also offered up some possible solutions. He believed that aid agencies should concentrate
Trade, not aid, is the key to economic growth in developing countries. To what extent do you agree with this statement?
Harvard Business School’s Case Study “Aid, Debt Relief, and Trade: An agenda for fighting World Poverty” outlines the steps, and missteps, that the world community has taken since World War II to address the efficacy of international assistance. The study focuses on international financial institutions (IFIs) and their ability to help poor nations break out of poverty and the possible obligations of rich, developed countries to assist the heavily indebted poor countries (HIPCs). Additionally, the study seeks to see if this assistance has been and can be parlayed into growth and investment for the HIPCs.
The history of European aid intervention in the African, Caribbean and Pacific (ACP) states has traditionally acted to reinforce the hierarchical distinction between the “developed” and the “developing” world. The series of Lome Conventions which granted preferential trade agreements between these groups of countries have proved ineffective in encouraging economic sustainability in the ACP states, and although the ACP includes most of the Least Developed Countries (LLDCs) in the world, the agreements have been criticized as being unfair in the global context. Under pressure to negotiate a new ACP-EU agreement that would be