World Debt, Trade and Aid

1. World Debt, Trade and Aid Objectives: To name countries in debt, those lending and understand the scale of the problem. To assess how effective trade and aid can be at encouraging development.

2. Questions you should be able to answer at the end of this section: • With reference to one or more case studies, discuss the role that aid can play in the development of the economies of poor countries (10 marks) • Discuss the roles of both trade and aid in development issues (10 marks)

3. Trade vs. Aid in helping the poorer countries of the world to develop • Since the 1940’s, there have been 2 main ways to promote development in the poorer countries of the world: • The use of trade to encourage economic growth • Developed countries (and now also oil rich countries) provide aid to the poorer countries Both methods have their advantages and disadvantages.

4. What is trade? • Trade happens because of regional economic differences. In order to balance production and consumption, raw materials, goods and services are moved from regions of supply to regions of demand. • There is a strong relationship between the volume of trade and standard of living, and trade is an important factor of development.

5. Trade and development • It is difficult to achieve economic development without economic growth. Growth  increase in wealth  improved living standards (and eventually higher HDI). • In the 1940’s therefore, economists in MEDC’s believed poor countries needed to industrialise  increase in manufactured goods for export, rather than relying on exporting raw materials (cheaper, unreliable market, agricultural products are volatile)  increased economic growth and in turn, development.

6. How was this going to be achieved? • Poor countries should take on Western-style capitalism (potentially good for political situation too, as democracy is seen to be fairer) • The wealth that was generated would ‘trickle down’:money  resources for industry  more goods being produced  more trade  even more economic growth • Poor countries should promote neoliberal ideologies – the ideas of free trade, economic growth and efficiency, and open markets, that Thatcher and Reagan promoted in the 1980’s.

7. What was their big assumption?? • That the poorer countries in the South needed to develop in the same way that the richer countries of the North had done since the mid C19th, in order to achieve economic growth.

8. Task • Read the DFID information sheets that you have been given. • As a group list the ways in which trade can encourage development. Use examples and facts from these information sheets. • Are their any problems to this you can think of?

9. Who gets the aid? Predict a list of Top 7 countries in the world who you think receive the most aid from overseas.

10. Some facts and figures • In relation to what countries promise, in 2007 the total shortfall of aid was the staggering amount of over $3.6 trillion.

11. The focus of reasons why aid is given has changed over the years. What trends and patterns can you spot from this graph?

12. Oxfam • Oxfam International is a confederation of 14 like-minded organisations working together and with partners and allies around the world to bring about lasting change. • Oxfam GB is a member of Oxfam International. • Oxfam is a Non-Governmental Organisation involved in ‘bottom-up’ projects • They do development work (long-term aid) and also deliver emergency response (short-term aid) • (As well as fund raising, increasing awareness of global issues, etc.)

13. Some Northern governments have stressed that “trade not aid” should be the dominant theme at the (March 2002 Monterrey) conference (on Financing for Development). That approach is disingenuous on two counts. First, rich countries have failed to open their markets to poor countries. Second, increased aid is vital for the world’s poorest countries if they are to grasp the opportunities provided through trade.” Oxfam, March 2002

14. Oxfam’s development projects – long-term aid In drought-prone Mauritania, making a living can be desperately hard – so Oxfam gave people seeds, tools and training. They put in the work, and now have flourishing vegetable gardens, providing food and income.

15. Supporting schools Education is vital in fighting poverty. Villagers in Kakolo, Zambia, knew this and built their own small community school – Oxfam helped make it bigger, and supplied equipment and teacher training. Eventually they won local funding. It now has 1,200 students.

16. Safe drinking water Dirty water can kill. In north-eastern Brazil, there’s little rain and people have to risk drinking whatever water they find. Along with the Brazilian government, Oxfam is helping local organisations to build a staggering one million cisterns to catch rain – for clean water, all year round.

17. Case study: Oxfam’s involvement in the Asian tsunami, Dec 2004 • http://www.oxfam.org.uk/oxfam_in_action/emergencies/tsunami.html • Using the above link, create a case study on Oxfam’s involvement in the Asian tsunami. • Use the ‘introduction’, ‘situation’ and ‘response’ tabs, as well as photographs, video footage and in depth reports.