4) Development issues: Trade verses Aid

4) Development issues: Trade verses Aid

1. Trade

   • the nut industry
     • The American Peanut can be described to be the luckiest Nut in the world.....
       • The American peanut was heavily invested in the peanut industry. farmers get a bonus from the state for every ton of nuts produced. this allows them to sell it at a lower price. the market is also large as the average American consumes 6 pounds of peanuts per year.
         • Unlike Senegal, they had enough resources to properly develop their trade in the nut as well as protect it from any changes in tarrifs or from other countries.
     • The senegal ground nut
       • the ground nut was Senegal's greatest industry in 1960 when they became independence. As they couldn't invest in their resources, they needed help from the world bank. The world Bank encouraged them to work on exporting so they could repay the huge debt they had.
         • unfortunately as other newly developed countries produced groundnuts as it was a stable export it meant the price of them fell. because of this, sengal lost money and had to borrow even more money from the world bank.
           • To pay back its debt, Senegal spends more money paying back its debt rather than on health and public services.
   • Fair Trade
     • Fair trade is an informal movement initiated by businesses and consumers in MEDC's to give poor farmers and cooperatives in LEDC's a greater share of value of their food exports.
       • Consumers pay higher prices for the fair trade products resulting in the farmers cooperating in LEDC's recovering extra money which can be spent on individual families or community projects
     • close political and historical ties between the UK (and other EU countries) and small banana producing nations in Africa, the carabian and pacific (ACP) gave rise to preferential trade agreements between the EU and these countries.
       • The agreement between the EU and the ACP caused a long running dispute between the EU and the WTO. Non ACP bannanas paid a tariff of US$ 250 per tonne of entry to the EU Market while ACP growers a 775,00 tonne tarif free bannana quota
         • The WTO ruled that this gave ACP Farmers an unfair advantage.

2. Since the 1940'a, efforts to create development in the poorer countries of the world have been centred around two approaches

   • The Use of trade to promote economic growth.
   • The provision of Aid, by the developed countries of the North ( and latterly, Oil rich states) to the poorer countries south of the Brandt line.

3. trade and aid in in sudan

   • Aid
     • Sudan is one of the poorest countries in Africa. Poverty is widespread. 46.5% of the population live bellow the poverty line of $1 a day. Sudan recieves a large amount of aid per year.
     • Sudan recieves $2 billion of aid. this is 4.7% of its GNI. these are from different sources including individual governments, like the UK and US as well as international organsisatios like the UN and NGO's such as save the children.
     • Some Aid is used to promote development development by attempting to prevent conflicts and rebuilding infrastructure investing in education and health. E.G, the US agency for international development has funded construction and refubishment of 140 primary schools and 5 secondary schools
     • Unfortunately, as good as aid can be, It can be hard to get it to the right places because of corruption and conflicts.
   • Trade
     • in the 1990s, lots of Sudan's exports were low profit agricultural goods such as Cotton, Nuts, and Livestock. Sudan had a trade deficit as it was spending more than it was recieving (Importing more than it was exporting)
     • in 1999 Sudan started exporting oil. as a result the country had its 1st trade surplus (it earned more than it spent on imports) over the last decade oil has become the main export and the trade surplus reached $1.4 billion. in the 1st few months of 2011.
     • this growth helped development because it brings economic growth and improves international relations (E.G Trade agreements have been made by the EU, US, Egypt and Lybia.
       • there are concerns however, that profits from the oil industry aren't funding development though because of corruption in the government.
       • It is dificult for Sudan to make profit because of barriers to trade, e, g 2012 average improt tarrifs were about 20%. however, in Sudan, the process of joining the WTO which will make international trade easier and give the country access to a wider market for its exports.

4. Aid

   • types of aid
     • Bilateral
       • from one country to another.
     • Multilateral Aid
       • from international organisations which receive money from several countries e.g. United Nations, the World Bank. Emergency or short-term aid – food or medical help to give short term relief.
     • distribution
       • Short term Aid
         • Also known as emergency aid, this is the aid that you will have seen on the news. Charities and governments send short term aid after a natural disaster to help the country recover.
       • long term development projects
         • Long term aid aims to help the country develop in the future, by introducing schemes to help things like health care, education and food production. Many of the NGO's are involved in these long term schemes, which can be large scale or small scale projects.
       • Top Down Aid
         • Large scale aid is called top-down aid as it is usually given to the government of the developing country so that they can spend it on the projects that they need.
           • Unfortunately this can lead to the mis-use of aid money by unscrupulous governments. Aid from developing country governments tends to be given as top-down aid.
       • Bottom up Aid
         • Small scale aid projects are called bottom-up aid. These target the people most in need of the aid and help them directly, without any government interference. Aid from charities tends to be bottom-up aid.
     • Non-Government Organizations (NGO's)
       • non-governmental organization (NGO) is a not-for-profit organization that is independent from states and international governmental organizations. They are usually funded by donations but some avoid formal funding altogether and are run primarily by volunteers
   • Poverty reduction strategy papers
   • New approaches to Aid
   • pros and cons
     • Supporters of Aid
       • Its believed its greatest strength is that while it can be directed to economic development such as to develop natural resources and power supplies, it can also be for..
         • humanitarian purposes such as emergency aid in times of a disaster
         • social development such as provision in medical training and equipment
         • environmental improvement
       • proof aid can work (bottom up)
         • In nigeria, the ration of boys to girls in education is 3:1 (Boys:girls) there is not enough girls. 8 million children are out of education
         • UNICEF, the Nigerian government and the UK donated £59 million to promote it.by teaching local women how to teach and giving resources to 740 school enrolment has improved. by teaching local women, it can encourage female empowerment which is a serious issue in many Lics and poorly developed countries.
     • critics
       • critics however point out that
         • Aid does not always reach those who need it. its not always used the best due to corruption.

5. This topic is about the different types of trade and Aid between countries and how it can effect the country recieving it.

6. International aid is not working. : Dowden suggest that aid donations are rooted in a missionary approach' to African development that needs to be re examined. Billions of pounds worth of aid has poured into Africa the past 50 years.

   • Huge subsidies paid to European farmers under the Common Agricultural Policy (CAP) make African imports relatively expensive. protective trade tariffs encircling the European Union (EU) force up the cost of African goods once they are imported. To remain competitive, farm wages throughout the African continent have been forced down to sucha low level that many cash cropping farmers now experience poverty where are when they were subsistence farmers they did not.
     • It is difficult to import competitively proced cereals into the EU due to the CAP subsadies given to European farmers. As a result, too many LEDC's are competing for coffee trade ( a crop which cannot be easily grown within the EU due to climatic reasons. The world coffee prices are now at a 30 year low. with a price that is just 25% of the 1960 level in real terms.
       • The point of Fair trade: Until CAP reforms occur, many british consumers try to make a difference to quality of life in African nations and other LEDC's by buying Fair trade goods. These brands promise to return a greater share in profits to the farmers.