Reducing Disparities… Review: What are the major reasons why some countries are less developed than others?

Civil Conflict and Governance Examples Indonesia Colombia Uganda Democratic Republic of Congo Kenya Burma Iraq Sudan

AIDS kills two million people in Africa a year, ten times more than war. In MEDCs the HIV infection rate amongst the adult population is less than 1%. In South Africa, it is 20%, with 1,500 more people being infected every day.

Climate Change and Development “Up in Smoke?” report (2005, updates 2006) "In my view, climate change is the most severe problem that we are facing today, more serious even than the threat of terrorism." David King, Chief Scientific Advisor to the UK Government

The digital divide …

Focus on Africa … Economic ‘Unfair’ trade High transport costs (a colonial legacy?) Reliance on primary commodities Late entry into manufacturing sector Overseas debt High risks of overseas investment For every dollar received in sub-Saharan Africa in aid and debt relief between 1970-2000, the region lost $14 from trade barriers, debt servicing and poor investment policies Political Civil conflict Poor governance Environmental Low agricultural productivity Impact of climate change Social Poor health and education Pressures of popl growth and urbanisation ‘The brain drain’ www.commissionforafrica.org

How to Reduce Disparities?

Expanding Trade

Strategy Overview The world’s 49 least developed countries account for only 0.4% of world trade World Development Movement website Dependence on primary commodities – which are often subject to extreme fluctuations in price Lack of infrastructure, technology and manufacturing base mean developing countries can’t climb out of poverty cycle Unsustainable exploitation of natural resources Overseas debt Many of the poorest countries lack the technology, infrastructure and manufacturing base to compete with companies in MEDCs. Finite resources and land used up to afford the same quantity of manufactured imports. The 52 poorest countries spend an average of £30 million a day on debt repayments. Although 42 countries now qualify for debt relief under the Heavily Indebted Poor Countries Initiative (HIPC), only 12% of their debts have been written off. Half of them spend more on debt repayments than on health care (www.jubileedebtcampaign.org.uk) Visit http://web.channel4.com/learning/main/netnotes//seriesid144.htm for a very good (I think!) overview of the debt crisis. According to the World Development Movement, in the last 20 years, LEDCs’ share of world trade has halved, income per person has fallen in 59 countries, and the number of people living on less than $1 a day has risen dramatically (www.wdm.org.uk/campaigns/trade/index.htm)

The Potential Benefits of Trade: (Overview of Strategy) The WTO estimates that the 1994 Uruguay Round trade deal added $109 – 510 billion to world income. Trade creates more and better paid jobs. Poorer countries can exploit their comparative advantage (‘do what you do best and trade for the rest’) Ie: case of cotton in India & Brazil If Africa, East Asia, South Asia and Latin America were each to increase their share of world exports by one per cent, the resulting gains in income could lift 128 million people out of poverty. In Africa alone, this would generate $70 billion – approximately five times what the continent receives in aid. (Rigged Rules, Double Standards report, www.maketradefair.com)

The Case of Coffee … Useful web links on the coffee trade: www.maketradefair.com/en/index.php?file=coffee_chain_home.htm&cat=2&subcat=3&select=1 www.maketradefair.com/assets/english/mugged.pdf www.globaleye.org.uk/secondary_autumn04/eyeon/coffeetrade.html www.ico.org 1997-2002: Coffee prices fell by 70%, costing LEDC exporters $8 billion in lost foreign exchange earnings Dominated by four TNCs – 25 million coffee growers receive an average of $1/kg; consumers pay $15/kg

CRITICISMS: Expanding Trade will benefit MEDCs Trade and Unequal Development Trade barriers (tariffs, subsidies, quotas) Surplus dumping The balance of power in the W.T.O. TNC control CRITICISMS: Expanding Trade will benefit MEDCs Trade barriers cost LEDCs $100 billion a year - twice the amount they receive in aid. The average cow in the EU receives $2.20 a day in subsidies while more than 3 billion people live on less than $2 a day. Dumping of surplus commodities destroys local economies in LEDCs. WTO since 1995 – liberalisation of world trade but an unequal playing field. Intensification of trade inequalities with the General Agreement on Trade in Services (GATS) – impact on public utilities, tourism sector. TRIPS (agreement on Trade Related Intellectual Property Rights) could cost LEDCs $40 billion in increased royalty/licence payments to TNCs. TNCs now control two-thirds of world trade (www.dfid.gov.uk/pubs/files/whitepaper2000.pdf) – greater freedom to shift location to LEDCs where wages are lower, less restrictive rules and regulations. Of the world’s 100 largest economic entities, 51 are TNCs and 49 are countries. General Motors, Wal-Mart, Exxon Mobil, and Daimler Chrysler all have revenues greater than the combined GDP of the 48 least developed countries (www.cafod.org.uk) For a more challenging source of info, visit the Third World Network site - www.twnside.org.sg/