Global Inequality (Pack 6.2) Causes and Possible Solutions

1. Global Inequality (Pack 6.2) Causes and Possible Solutions

2. THE CAUSES OF INEQUALITY Learn the various causes of inequality (with examples or case studies) and make sure you can explain each one: • UNFAIR TRADE • One-sided terms of trade give advantage to MEDCs e.g. MEDCs put x 6 tariff on LEDC imported coffee from Tanzania, Sangito (Tanzanian coffee grower) - £7 per month from coffee (cash crop) which feeds family for 1 day. 1 kg. jar of instant sells for about £17. Tariff (import tax) goes to EU and LEDCs lose sales.

3. Unfair subsidies, where European farmers get money from their governments, while tomatoes growers in Ghana lose sales because they don’t, and USA cotton farmers gain while growers in W. Africa have no government help. • Use of quotas. EU set quotas for cheap clothing imports from China. This protection EU textile industry, but limits Chinese sales. • Exploitation of cheap labour e.g. Teletubbies in China, trainers in Indonesia.

4. THE DEBT TRAP Money lent by MEDCs to LEDCs during 1970’s oil boom can’t be paid back – LEDCs now, because of interest charges, owe more than they originally borrowed – from 1982 to 1990 LEDCs paid back $418 billion more than they were given in aid – money spent in repaying debt is therefore not spent on food, education, health and so on.

5. COLONIALISM European countries built up overseas Empires during the Middle Ages. The countries owned were calledcolonies - were often made to produce cash crops and take on the culture of the MEDC Imperial Power – countries became independent in 1950/60s – left with unfair trade and big social problems. You will need to be able to write about how a colonial power changed as it moved towards and through independence or self – determination, e.g. India, or the Windward Islands banana trade.

6. OVER – POPULATION High birth rate in LEDCs is a consequence (effect) of poverty not a prime cause. Poor adults need children to look after parents in old age and sickness, to provide a work force for farming. High infant mortality and low life expectancy in LEDCs therefore leads to high birth rate in the hope that some will survive to adulthood. Some cultures’ religions are against birth control, e.g. South American Roman Catholics. Puts big strain on poor countries. Was similar pattern in Europe before increased wealth, better health and education reduced need and desire for large families.

7. BAD OR CORRUPT GOVERNMENT Some misguided thinking adds to poverty, e.g. Tanzanian resettlement of Masai off game reserves. Masai were not allowed to farm or raise animals. Some dishonesty and corruption, e.g. theft of aid meant for the starving for resale for profit. Some aid is siphoned off into arms contracts Both add to difficulties.

8. ENVIRONMENTAL DEGRADATION LEDCs often forced (for money) to spoil environments to survive, making trouble for the future, e.g. overgrazing in Sahel leads to desertification or logging in Brazil leads to deforestation. MULTI-NATIONAL COMPANIES Many global companies based in MEDCs benefit from cheaper labour and capital costs by running their operations from LEDCs. Whilst this brings jobs and infrastructure to LEDCs, much of the great profits leaves the LEDCs and adds to the wealth of MEDCs.

9. POVERTY BREEDS POVERTY Use the “Poverty Cycle” or “Poverty Trap” to show how poverty leads to more poverty. Poverty – hunger – malnutrition – poor health – missed education – lack of work skills – unemployment – poverty and round again …

10. POSSIBLE SOLUTIONS TO INEQUALITY • AID • WAYS OF GIVING • SHORT TERM – food aid, emergency aid • LONG TERM – money, experts, equipment • BILATERAL AID • Given by one country direct to another. Often tied, i.e. has to be used to buy goods/services from donor country. Okay, but not enough. • MULTILATERAL AID • MEDC gives to international organisation like UN or World Bank who then distribute to LEDCs. Some wasted in administration. Not enough.

11. VOLUNTARY AID Charity, e.g. Oxfam, Cafod, (NGOs). Good but small fry. Less than 10% of UK aid. COMMERCIAL LOANS Interest rates create more debt.

12. 2. CANCEL DEBT Good solution but slow progress. Western governments fear unpopularity with the public. French did cancel debt in Nicaragua and Guatemala following hurricane in 1999. Big push by NGOs (Jubilee 2000, Drop the Debt 2005). Labour Government campaign 2005. Pressure from “Make Poverty History” alliance of NGOs to demand action from G8. 3. SELF HELP SCHEMES LEDCs are assisted to become autonomous (not reliant on MEDCs) by education and training, e.g. Honiara (Solomon Islands) market gardening to become self-reliant in food.

13. 4. FAIR TRADE • Big push by NGOs (non – governmental agencies, e.g. charities). • Fair trade coffee, bananas. Co-op a leading supermarket to support in UK. • End unfair subsidies and tariffs • Pay fair wages.

14. BEST METHODS? A combination of all methods helps, but in the end we should encourage LEDC independence and self-sufficiency. Economic development has to be sustainable over the long term. This is in the interests of people in both LEDCs and MEDCs.

15. The more developed LEDCs become, the more MEDCs can trade with them. And let’s help LEDCs not to rely on us, but to become their own boss … “Give a man a fish and you feed him for a day. Teach him how to fish and you feed him for life”.