Strategies to reduce the global development gap.

What are microfinance loans?

Small loans provided to low-income people or groups often excluded by traditional banks, to help them start or grow businesses, build assets, and be self sufficient.

They help financial inclusion and poverty reduction by offering credit, savings, insurance, and other services to the unbanked.

These loans typically have flexible terms.

How do microfinance loans reduce the development gap?

They provide access to eg credit and allow people to be more financially stable.

It greatly helps people expand their businesses, especially small ones.

For example, farmers may use loans to buy better seeds and fertilizers to help improve crop yields. This can lead to higher crop yields and more profit, and more money to invest long-term.

What are advantages of microfinance loans?

Increased access to financial services for poorer people.

Can help borrowers build a credit history, potentially allowing them to access a wider range of traditional financial services in the future.

What are disadvantages of microfinance loans?

Often have high interest rates (can be over 30%) creating a higher debt rate and exploiting those in poverty.

Some argue these loans only help subsistence-level businesses rather than aiming for long term financial independence.

What is investment by TNCs?

Transnational corporations are large private companies that operate in multiple countries as well as their origin country.

TNCs will have a centralised headquarters in one country and manage production or deliver services in several other foreign countries.

Examples include Apple, coca cola and Toyota.

How do TNCs reduce the development gap?

LICs typically only trade primary products, such as raw materials, which don't generate much profit as are often in surplus and taxed with high import tariffs.

Due to less profits, LICs often don't have enough money to import products from HICs that aid development.

TNCs solve this problem by investing money into countries with primary products called foreign direct investment (FDI).

This employs local people to build factories and offices, inducing the multiplier effect (whereby investment in turn helps other businesses to thrive, creating more work).

What are advantages of investments by TNCs?

TNCs often create jobs in developing countries.

TNCs bring advanced technology and skills, benifittng the economy.

TNCs invest in local communities improving quality of life through facilities like healthcare and education.

What are disadvantages of investments by TNCs?

TNCs often pay low wages and provide poor working conditions, leading to exploitaiton of local workers.

Investments can result in pollution, deforestation, and resource depletion.

Many TNCs take profits back to their home countries, reducing the economic benefits to the host country.

What is industrial development?

The process of a nation or region changing its economy from one focused on agriculture to one with a significant industrial base.

This typically involves new technologies, job creation and urbanisation.

Industrial development can help reduce the development gap by creating more jobs, increasing national income by higher value exports and stimulating growth through the multiplier effect.

What are disadvantages of industrial development?

Can lead to air and water pollution and soil degredation due to the transportation of raw materials and manufactured products.

Wate products of industrialisation are frequently left in landfill sites which may cause contamination to the soil and water sources.

May lead to poor working conditions as manufacturers want to make as much product for the smallest cost to them.

What are advantages of industrial development?

Allows more goods to be bought at affordable prices.

Creates more jobs.

Increases national income through exports and imports.

odern high-tech machines tend to have a lower environmental impact than more traditional machines.

What is (international) aid?

international aid is a gift of money, goods, or services to a developing country.

Unlike a loan, the gift doest need to be repaid.

The donor may be a country, or a group of countries such as the EU.

Individuals in HICs give aid through charities such as oxfam.

For example, DR Congo was given US$73 million by international donors to help it build a new dam and hydroelectric power project.

How does international aid reduce the development gap?

It provides resources like money, food, technology, and expertise to less developed countries, and to help fund projects.

For example, DR Congo was given US$73 million by international donors to help it build a new dam and hydroelectric power project.

This improves public health, education, infrastructure and provides jobs to locals.

What are the advantages of aid?

Immediate humanitarian relief - can quickly provide essential suppies like food, water and medical aid during crises and natural disasters.

It can support long-term projects to improve infrastructure, sanitation, education and healthcare, leading to higher living standards.

Can help stimulate economic growth by funding new industries, providing technology etc.

What are the disadvantages of aid?

Recipient countries can become reliant on aid, reducing their incentive to develop self sufficient economies.

Aid money can be diverted by corrupt officials instead of reaching the people who need it, nd some aid projects may be inefficient or poorly managed.

What is intermediate technology?

It's using equipment and techniques that are suitable for their ountry of use.

Many poorer countries don't have the skills to maintain expensive equipment.

Small-scale, basic solutions are usually more appropriate.

What are the advantages of using intermediate technology?

Increased accesibility - usually low cost and can be aquired by local communities without government support or support from NGOs.

Can create job opportunities.

Sustainability - these technologies are frequently more environmentally friendly and easier to maintain because they’re designed for local environments.

Much easier for locals to use.

What are disadvantages of using intermediate technology?

Limited scalability - they often lack the efficiency of advanced technologies, which can restrict their ability to meet demands of larger populations. It can become a limiting factor in development.

Communities can become reliant on outside organisations for maintenance upgrades and development.

What is fair trade?

The aim to give producers a better price for the goods they produce, and a price guarante.

If the global price for a particular crop like coffee collapses, fairtrade farmers will still receive their regular incomes which protects their quality of life.

What are the advantages of fair trade?

Provides farmers a stable income.

Fairtrade also promotes gender equality.

The Fairtrade Premium provides extra funds for community projects like schools, healthcare, clean water, or business improvements. 

Standards ban discrimination, forced labor, and child labor, while ensuring safer workplaces. 

What are disadvantages of faritrade?

Higher prices on fairtrade products means many shoppers avoid buying them, especially during times of economic hardship, which means there are a limit of farms or villages that can be a part of the scheme.

The variety of fair trade goods is much smaller than non-fairtrade goods, limiting consumer choice.

What is debt relief?

A strategy that reduces or reorganizes a country's debt to make it easier for the country to pay it back.

This frees up funds for development and other services instead of debt repayment.

Debt relief can be achieved in many ways, such as debt forgiveness, rescheduling payments, buybacks and debt-for-development swaps.

How does debt relief reduce the development gap?

Countries don't need to pay as much towards debts and can invest in other things, such as healthcare, education, clean water, etc, all of which go towards a country’s development.

The country can fully priorotise the development of their country, instead of focusing on paying off debt.

What are advantages of debt relief?

Increased social spending - with reduced debt payment, countries can allocate more money to health, education, and other social services.

Debt for nature swaps.

Can reduce poverty.

What are disadvantages of debt relief?

Misuse of funds. There's a risk that the money may be misused by corrupt governments or individuals.

Finance may not be managed responsibly in the future.

Doesn't address the root causes of conflict associated with debt, or government issues.

Many debt recievers wont do this as it doesn't benefit them.

What is an example of how the growth of tourism in an LIC or NEE helps to reduce the development gap?

Tunisia

What are some statistics on Tunisia?

In 2013, tourism brought 6.2 million people to Tunisia.

Tunisia had a GNI per capita of US$4,230 in 2014.

Since 1960, life expectancy in Tunisia has risen from 42 to 75, showing social development.

Why is Tunisia a popular tourist destination?

Climate - the country’s northerly coast enjoys a mediterranean climate, with hot summers and mild, warm winters. Summer temperatures reach 40 degrees.

Links with Europe - Tunisia’s northern coastline is close to Europe, making it accessible. French colonial rule ended in Tunisia in 1956, so French is widely spoken and understood, attracting French speaking tourists.

Tunisia contains 7 UNESCO world heritage sites, including the El-Jem amphitheatre built by the Romans.

How does tourism benefit Tunisia?

In 2009, the industry provided 370,000 jobs.

The economic benefits of tourism have lead to the multiplier effect. Alllround higher income quickly translates into longer life expectancy and diet and health improvement.

More families can afford to send their children to school, and schooling is now compulsory for girls, due to a connection with other cultures as a result of tourists.

What may be used to suggest tourism isn't s sustainable development strategy in Tunisia?

Pollution of the environment - some of Tunisia’s Mediterranean beaches have been polluted with untreated sewage from hotels.

Leakage of profits - foreign companies like Thomas Cook send holiday makers to Tunisia but keep a large percentage of the profits. This limits how much money becomes reinvested locally.

Terrorism - in 2015, there were 2 terrorist attacks aimed specifically at tourists.

One took place at a museum in Tunis, and the other at a beach in the Holiday destination of Sousse.

As a result, European governments say Tunisia is no longer a safe destination for their citizens, which means less foreign investment in Tunisia’s economy.

What is an example of an NEE experiencing rapid economic development leading to significant social, environmental and cultural change?

India