Bridging the development gap

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  1. 1. Bridging the Development Gap Development Gap The difference in income and quality of life in general between the richest and poorest countries in the world Food Crisis Before Cheap imports Low interest rates cheaper property Food surpluses After (2006) Price of rice rose by 70% between 2007/08 Poor harvests Growth of biofuels reducing land available Rising demand Hoarding of rise Rising oil prices Speculators predicting food futures Lead to several govts banning the export of rice Philippines 1990s was self sufficient, by 2008, was worlds biggest importer, due to urban development and population growth Troops had to distribute rice Restaurants advised to give half portions of rice Identifying the Development Gap North-South Divide 1981, the Brandt Report was created Showed the North had 80% of wealth (1/3) Measuring the DG GDP value of products produced in a country over a year, also can be changed into GDP per capita showing the average income GNI Shows the income from overseas investments, and profits from subsidiary overseas firms many wealthy countries earn money this way GDP/GNI do not show what per capita is worth in terms of spending power and taking into to account the cost of living
  2. 2. PPP To show what per capita income would purchase when the cost of living is taken into consideration (Several currencies expressed in one currency) HDI Measures quality of life life expectancy, education (literacy and length), GDP per capita Below 0.5 = low level of development >0.8 means high level Uganda Green, fertile, rainy seasons, half population of UK, similar land area Good resources HDI = 0.505, UK = 0.946 GDP per capita - $1454 (4.4% of UK) Based on export of primary products, meaning low income 24% of families undernourished Poorest 20% infant mortality 106/1000 HIV/AIDS average life expectancy 49.5years 60% have access to clean water Now only 6% of population are HIV-positive due to awareness Education 17% of girls attend primary, 1/30,000 students allowed to uni The Debt Crisis Before, several countries self-sufficient, stable and low debt Oil price rise meant OPEC received more money, put money in banks Banks lent money out, but interest rate rises, increased payments Several countries could not pay debt IMF helped refinance loans, but only if cuts in govt budgets were made Highly Indebted Poor Countries 38 countries, (32 in s-S Africa) Pressure for NGOs to reduce debt burdens 2005 -G8 met, and cancelled $40billion worth of loans from 18countries, as long as good financial management occurred, less corruption and money saved was spent on education, healthcare, and poverty reduction 2008 27/38 countries met conditions for debt relieve saving $85billion
  3. 3. Impacts of Debt Cancellation (Uganda) 20% increase in public services spending (40% on education, 70%health) Free primary schooling introduced 2.2 million have clean access to water HDI rise 1985 -0.420, 2005 0.505 Core and Periphery Core areas drive the world economy, were first industrialised, from investment from prosperous farm economy Peripheral lack capital, tend to export primary resources Core import, process and add value Global shifts to periphery due to cheap labour Neo-liberalism Promotes free market theory and the private sector Reduced government influence However, in many developing countries, many feel that threats such as poverty can only be helped by govt help South Africa Large reserves of diamonds and gold, several tourists Income inequality rates are high privatisation gave whites chance to become richer Unemployment has reached 30% Over 18,000murders a year, crime rates are high New black political party, privatised several industries in 1994 to attract investment Most economic growth was due to capital intensive Apartheid segregation between blacks and whites 50% SAs population under 18 Inflation between 14-20% Cuts in health spending Large regional and ethnic inequalities
  4. 4. Bangalore Specialises in IT, banking and finance Has 40% of IT workforce, attracting foreign investment outsourcing Hubs designated to firms such as Electronic City Tax breaks, low wage rates attract firms Has highest average incomes in India Caste system Religious and social class system defined by birth and family this discrimination has been made illegal, but still occurs More housing needed, public transport, energy, airport Trade or Aid Many countries donate 0.7% of GDP to developing countries However, trade may be more effective multiplier effect Uganda Ugandas independence from Britain, lead to Idi Amin to take over, and exported commodities such as cotton and tea dramatically decreased Amin now left, growth is achieved but not filtered to the poor Uganda lent money by IMF if tariffs were removed Privatisation lead to unemployment as firms became more efficient Cuts in govt spending Good economic growth average, reduced poverty Low average income, income inequality Free trade or Fair Trade WTO put pressure on EU subsides on sugar NGOs such as Oxfam put pressure on rich countries Uganda must also remove trade barriers to gain access to EU markets Uganda has fluctuating economic capacity Poor infrastructure Leaves Uganda vulnerable to global, more competitive competition
  5. 5. Aid or Investment? Investing in large projects, this has the multiplier effect such as creating jobs and getting money to the poor Top-down development can have a greater influence and larger investment Bottom-up occurs on a community level projects designed to benefit them Aid loans, agreements such as purchase of a countries exports Investment firms locating in a country Projects combining aid and investment such as the Akosombo Dam Akosombo Dam (A&I) Ghanas Aluminium Smelter (A&I) The Pergau Dam Malaysia Aid Electricity production self sufficient, exported Many Ghanaians can not afford electricity Increased water transport inland 80,000 people forced to relocate due to flooded land Lead to increase in tourism and irrigation Decline in shrimp population meaning people have less protein in their diets Increase in water-borne diseases US firm Kaiser Aluminium built smelter in Ghana Ghana has several deposits Mined by a Ghanaian firm, 80% owned by US firms Electricity owned by Alcan HEP plants Ghanas added value Aluminium going overseas Govt bought smelter to increase control, but closed due to lack of water in 2008 Built with 234million of British Aid Deal was that Malaysia would purchase 1billion worth of British built fight jets, despite laws not allowing The Dam was built and organised by British firms Lead to flooding of fertile land No long term benefit, cheaper to invest in gas station
  6. 6. Uganda Bottom-up aid Kingship Project Aid The Millennium Development Goals Eradicate poverty and hunger Achieve higher education Global partnerships for development Environmental sustainability Improve child mortality rates, HIV and AIDS Progress? Increase in children at school More people receiving AIDS treatment Economic growth 980million still live on loess than a dollar a day Private sectors increasing NGOs, faith groups and professionals helping out Critiscm Village of Barlonyo, experienced a 300kill massacre Support of NGOs allowed a democratically run cooperative to be ran Farmers have equal say in decisions, females have more power Cooperative allows better cooperation such as sharing the costs of hiring a truck for harvests Extra income allows schooling for children NGOs have also invested in improving farm output Run by a school, a club, and a Christian organisation 30% of Moldavians live in poverty Suffer from emigration Poor literacy, school attendance and health rates Community centre built allowing food preparation, showers, study area