1_How can we reduce disparities?

1_How can we reduce disparities?

1. Trade and Market Access ( Unfair trading patterns are one of the causes of the development gap. MEDCs account for 75% of the world's exports and over 80% of manufactured exports. The pattern is complicated by flows of foreign direct investment (FDI), and the internal trade within transnational or multinational corporations. Most of the flow of profits is back to MEDCs, while an increasing share of FDI is to NIC (New Industrial Country). Reform of trade is necessary to protect LEDCs and small countries.

   • Trading blocs
     • Trading blocs are unfair as they deny access to non-members; countries from developing world have more limited access to the rich markets of Europe
     • Export processing (EPZ) and free trade zones (FTZ) - allow equal access to all producers to all markets, 90 countries had established EPZs as part of their economic strategies. EPZs have been most concentrated in the Asia-Pacific region, where in the 1990s approximately 40% of EPZs were located but where two-thirds of employment in EPZs was generated
   • World Trade Organization
     • Not democratic - 'passive consensus', whereby any member who is not actively opposing a proposal is taken to be in favour of it
     • Rich countries limit and control poor countries' share of the world market by charging high taxes on important goods. By increasing global commerce by just 1% in Africa alone this would generate 70 billion a yar.

2. Aid

   • After a natural disaster, food and medical aid can be vital in savings lives and can not be always provided by the affected government . China offered $5 millions after huriccane Katrina for USA, along with emergency supplies
   • It provides external resources for investment and finances projects that could not be undertaken with commercial capital
   • Aid contributes to personnel training and builds technical expertise
   • Aid can support better economic and social policies
   • Aid might allow countries to postpone improving economic management and mobilization of domestic resources
   • Aid can replace domestic saving, direct foreign investment and commercial capital as the main sources of investment and technological development
   • The provision of aid might promote dependency rather than self-reliance
   • Aid is sometimes turned on and off in response to the political and strategic agenda of the donor country, making funds unpredictable, which can result in interruptions in development programmes

3. Remittances

   • Total global remittances from workers to their families reached $318 in 2007, up from $170 billion in 2002
   • Most of the money goes to LEDCs, more than double the value of foreign aid. India, China and Mexico account for 1/3 of remmitances to the developing world

4. Millenium Development Goals

   • 1. Eradicate extreme poverty and hunger 2. Achieve universal primary education 3. Promote gender equality and empower women 4. Reduce child mortality 5. Improve maternal health 6. Combat HIV/AIDS, malaria and other diseases 7. Ensure environmental sustainability 8. Develop global parthership for development
     • In 1990 over 25% of people lacked access to safe water, according to the United Nations. By 2015 it will be less than half that number.

5. Debt relief

   • $97 billion of debt has been cancelled in poor countries since 1996; $620 million was spent by Kenya servicing its external debts in 2013, equal to roughly 20% of the development assistance it received in the same year; 98% of Tanzanian children were enrolled in primary school in 2008, after the governments used its savings from debt relief to abolish school fees
   • Sub-Saharan Africa (SSA) includes most of the 42 countries classified as heavily indebted and 25 of the 32 countries rated as severely indebted. In 1962, SSA owed 3$ billion. Today is about $235 billion. The most heavily indebted countries are Nigeria ($35), Cote d'Ivoire ($19)
     • What has been done? Bank has lent more through its concessional lending arm; The International Development Agency has given loans for up to 50 years without interest but with a 3-4% service charge; lending has risen from $424 milllion in 1980 to $2,9 billion, plus a further $928 million through the African Development Bank