Obstacles to Development REASONS WHY THINGS DO NOT GET BETTER

GOVERNMENT The decisions governments make particularly in terms of public spending The economic / political ideology The level of corruption The amount of bureaucracy and hindrance to private enterprise The accountability of government to its people Security and the rule of law

Vicious cycle of political instability

Access to Capital Without access to capital businesses cannot grow. No property rights and no legal status for your business  no access to credit no capital to invest in the growth of your business no possibility for growth and expansion  low revenue low profit

Disease Diseases such as Malaria and HIV/Aids reduce the productivity of a country. Death rates among economically active population are increased, people are too sick to work or caring for the sick. High levels of disease, infant mortality rates and fertility rates can be related to poor provision of health care

Natural Hazards Back to the idea of environmental determinism. Natural hazards can be an obstacle to development. Drought (Ethiopia mid 1980s), 2004 Indian Ocean Tsunami impact on Indonesia, regular flooding in Bangladesh, tropical storm damage in Caribbean.

Inaccessibility Map shows number of days travel to nearest city.

Landlocked and poor Countries with coasts and deep sea ports are able to import and export products easily and therefore be more integrated into the Global Economy.

Top container ports

Unfair Trade and Protectionism Subsidies paid to producers in MEDCs and trade barriers and protectionism limiting access to MEDC markets for LEDC producers are seen as major obstacles to development. *Subsidies: A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction

Unfair Trade and Protectionism Levels of protectionism are high in the global economy and many analysts argue that the rules of the Global Economy were made by MEDCs for the benefit of MEDCs.

Trade – Benefits for all? In theory trade should benefit all countries. International trade has been going on for a long time, so why are not all countries rich?

Dumping The rich world tells the poor world to get rid of subsidies, but continues to spend $1 billion a day subsidizing its own farming enterprises http://www.maketradefair.com/en/index.phpfile=issues_dumping.htm&cat=2&subcat=3&select=1

Market Access If Africa, East Asia, South Asia, and Latin America each increased their share of world exports by just one per cent, the resulting gains could lift 128 million people out of poverty http://www.maketradefair.com/en/index.phpfile=issues_dumping.htm&cat=2&subcat=3&select=1

Forced liberalization Millions of poor farmers in developing countries cannot earn a living because of cheap, often dumped, food imports http://www.maketradefair.com/en/index.phpfile=issues_dumping.htm&cat=2&subcat=3&select=1

IMPACT OF AID AND DEBT RELIEF

Aid received, per capita, in 2007, in $ of Official Development Assistance per person. Note that grey countries can either be non-recipients or ones for which data is unavailable. The data were converted into dollars using exchange rates, hence may not accurately reflect the purchasing power of the foreign aid receive

SSA 1962 OWED 3 BILLION 1982 OWED 142 BILLION 2010 OWED 235 BILLION NIGERIA 35 BILLION COTE D’ IVOIRE 19 BILLION SUDAN 18 BILLION

What are the different types of AID? What is AID?

Aid is ... Support Goods Services Money ... given to those in need

What different types of Aid are there? Duration: long-term, short-term, emergency Delivery: financial, goods, services from trained people Source: government, non-governmental organisations (NGO’s), charity, individuals Dependency: tied aid

What is top- down development? These tend to be big schemes and decisions are made by the national government. Local people who often live near the scheme do not get involved in the process Examples:

Top Down Decision Making External Groups e.g. World Bank, TNCs National Government Top Down Decision Making Local People

What is bottom-up development? Local people are fully involved in the process and decision making Examples:

Bottom Up Decision Making External Groups e.g. World Bank, TNCs Decision made here National Government Local People

Top Down Approach Conditions often attached to the loans Relies on external links and technology Dams etc provide energy needed for the country to develop Uses machinery etc rather than providing jobs for local people Top Down Approach Often environmentally effective as they use cheaper fuels e.g. HEP Country gets into debt as it borrows money from the World Bank etc As these areas grow the take away resources from peripheral areas

Bottom up Approach Involve the local people Appropriate technology to the local skill level Bottom up Approach Low cost Very limited impact of national poverty levels

Which are the best option? Looking at both Top down and bottom up approaches to development, which do you feel are the best option and why?

Effective aid projects or not? Government funding to Nepal – the UK Government recently gave £65 million to the Government of Nepal to use in its health services Oxfam’s Let Agogo Project in Haiti – gives cows to people who care for the cows and sell on the dairy products to earn income International Aid to Afghanistan – much of the international aid to Afghanistan is paid to foreign contractors for projects that do not meet the needs of the poor

Different Types of Aid (con’t) Type of Aid Description Voluntary aid Charities raising money for long term developments Bilateral aid Money given from one country to another for projects Tied aid The donor benefits (military bases) Multilateral aid International organizations (UN) * Emergency aid: following a disaster

Remittances Global remittances are about $300 billion per year. 30 million Africans send appox. $40 billion annually from the countries of work to their home countries. Up to 40 % of remittances to Africa are destined for rural areas Problem: most money transfer centers are in urban areas.

Remittances

Poor Countries Debt Reasons for problems low growth in industrialized economies high interest rates between 1975 and 1985 increase in oil prices falling commodity* prices *any unprocessed or partially processed good, as grain, fruits, and vegetables, or precious metals.

What has been done? Structural Adjustment Programmes (SAPs) economic policies for developing countries that have been promoted by the World Bank and International Monetary Fund (IMF) since the early 1980s

Structural Adjustment Programmes (SAPs) SAPs believe the key is with international trade. They consist of 4 main goals greater use of a country’s resource base Policy reforms to increase economic efficiency Generation of foreign income through diversification of the economy and increased trade. Reducing the active role of the state

Not everyone agrees http://www.globalissues.org/article/3/structural-adjustment-a-major-cause-of-poverty

Stabilization Measures Short term Limit any further deterioration of the economy (wage freezes, reduce subsides on food) Longer term boost economic competiveness (tax reduction, export promotion, downsizing civil services, privatization and economic liberalization)

Heavily Indebted Poor Counties Initiative (HIPC) The original focus of the HIPC Initiative was on removing the debt overhang and providing a permanent exit from rescheduling. Also to promote reform and sound policies for growth and human development. Launched in 1996 by the IMF and the World Bank.

Heavily Indebted Poor Counties Initiative (HIPC) 41 of the poorest and most heavily indebted countries, of which 33 are located in sub-Saharan Africa, are currently eligible to benefit from debt reduction under the enhanced HIPC Initiative.

Heavily Indebted Poor Counties Initiative (HIPC) There are two main stages to the HIPC Initiative. During the first stage the countries must adopt a number of measures in order to be considered for interim debt service relief (decision point). Once accepted, they qualify for some interim debt relief and must implement certain policies and meet certain conditions in order to qualify for full assistance (completion point). The process is very flexible, as there is no fixed timetable for the completion of the two stages.

Sustainable development Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

“…without compromising the ability of future generations to meet their own needs.” This is the concept of intergenerational equity. It is important to remember that future generation’s needs will be greater than ours because of population growth and development. It means that we inherit the Earth from previous generations and have an obligation to pass it on in a reasonable state to future generations. Our generation should not use more than our fair share of resources

Environmental Quality can be measured using a range of indicators which basically quantify our impact on the environment. Habitat loss, species extinction, biodiversity, air pollution, land degradation, water pollution, resource use, waste disposal, energy use and efficiencies, transportation, housing, recycling.

SO HOW MUCH DOES THE US SPEND