Development - Trade and Aid

Trade

Trade is the exchanging of goods and services between countries.

Most MEDCs and NICs import primary products which have low value and export high value manufactured goods an even higher value services.

Most LEDCs export lower value primary products, this means that they struggle to raise standards of living in their countries because they do not have much foreign money coming in from trade.

Positives

• International cooperation is promoted in the long term
• Boost employment
• Multiplier effect
• Spreads technology
• Help countries bring themselves out of poverty

Negatives

• Free trade can be risky for vulnerable economies
• Trade requires investment first
• Can lead to race to the bottom with cost

Case studies

• NICs like the Asian Tigers grew through trade.
• TNCs impact e.g. Coca Cola
• Trading blocs e.g. EU

Aid

Aid is money and support given to a country or region. 

Types of aid:

- Bilateral, when one country gives direct aid to another

- Multilateral, when aid is given through international agencies like World Bank

- NGOs and charities

- Emergency aid

Positives

• Usually focused on targeting a problem
• Can be given in different ways
• Sustainable with bottom up projects
• Aid can stimulate trade

Negatives

• Countries can become dependent on aid
• Can be unsustainable and inappropriate
• Hard to manage
• Corruption can lead to money not going to the right places

Case studies

Small scale - Mazoria, Ethiopoa

• Water Aid installed 8 new water pumps in the community 
• 2 people have been trained to maintain the pumps
• Provides better sanitation and health for the area
• Less time spent collected water (2-3 hours)
• However, in the long term the water supply could deplete and the pumps may not be able to keep up with increasing population.

Large scale - Cahora Bassa, Mozambique

• Located on the Zambesi river
• 85% financed by the Portugese 
• Full operation started in 1997
• Most energy is sold to South Africa because rural homes do not get electricity from the grid
• Local shrimp industry has been destroyed but there has been a large growth in Kapenta with 10,000 tonnes harvested a year