Obstacles to Development

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

• 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 different types of Aid are there?

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:

External Groups e.g. World Bank, TNCs

National Government

Local People

What is bottom-up development?

• Local people are fully involved in the process and decision making

Examples:

Local People

National Government

External Groups e.g. World Bank, TNCs

Decision made here

Top Down Approach

Country gets into debt as it borrows money from the World Bank etc

Uses machinery etc rather than providing jobs for local people

Relies on external links and technology

As these areas grow the take away resources from peripheral areas

Conditions often attached to the loans

Dams etc provide energy needed for the country to develop

Often environmentally effective as they use cheaper fuels e.g. HEP

Bottom up Approach

Very limited impact of national poverty levels

Involve the local people

Appropriate technology to the local skill level

Low cost

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 economieshigh interest rates between 1975 and 1985increase in oil pricesfalling 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 basePolicy reforms to increase economic efficiencyGeneration 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 termboost 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