2.2 The changing economic world - strategies used to reduce the global development gap

Question 1

Give 8 strategies used to reduce the development gap

Answer 1

-aid
-fair trade
-using intermediate technology
-debt relief
-investment
-industrial development
-tourism
-microfinance loans

Question 2

Aid

Answer 2

money or resources given by one country to another

Spent on development projects e.g. constructing schools to improve literacy rates, providing farming knowledge and equipment to improve agriculture and building wells to improve clean water supplies

Can definitely help but sometimes wasted by corrupt governments. Also, once money runs out, projects can stop working if there isn’t enough local knowledge and support to keep them going.

Question 3

Fair Trade

Answer 3

About farmers getting fair price for goods produced in LICs, allowing the to provide for their families

Companies have to pay producers a fair price to label products as ‘fair trade’

Buyers also pay extra to help develop the area where the goods came from.

Problem - only a tiny portion of the extra money reaches the original producers. Much goes to retailers’ profits.

Question 4

Using intermediate technology

Answer 4

Includes tools, machines and systems that improve quality of life but are simple to use, affordable to buy/build and cheap to maintain.

e.g. solar powered LED lightbulbs used in parts of Nepal where the only other lighting options are polluting, dangerous kerosene lamps or wood fires.

Allows people to work in homes/businesses and children to study after dark. Therefore, skills, incomes and industrial output increase, helping reduce development gap.

Question 5

Debt relief

Answer 5

Some/all of a country’s debt is cancelled/interest rates lowered - more money to develop rather than pay back debt.

e.g. Zambia had $4 billion debt cancelled in 2005.
2006 - free healthcare scheme for millions living in rural areas - improve quality of life.

Question 6

Investment

Answer 6

foreign direct investment - people/companies in one country buy property and infrastructure in another

leads to better access to finance, technology and expertise and improved infrastructure and industry and an increase in services

Question 7

Industrial development

Answer 7

Countries with low level of development - agriculture makes up large portion of economy.
Developing industry increases GNI + helps improve levels of development as productivity, skill level and infrastructure are improved.

Question 8

Tourism

Answer 8

Can provide increased income as more money coming into country.

Question 9

Microfinance loans

Answer 9

-small loans given to people in LICs who may be unable to get loans from traditional banks. Loans enable them to start their own businesses and become financially independent

Although works for some people, not clear that microfinance can reduce poverty on a large scale.