Cooperation or Exploitation

Poverty

Lack of sufficient resources to meet basic needs

Absolute poverty

Unable to meet basic needs for living

Relative poverty

Income below median income

Extreme poverty

Living below $2.58 a day

Sustainable development

Development that meets present needs without compromising future generations

GDP (Gross Domestic Product)

Total economic output of a country

Advantage of GDP

Makes government expenditures transparent

Disadvantage of GDP

Ignores inequality and social factors

GDP per capita

GDP divided by population

Advantage of GDP per capita

Allows comparison between countries of different population sizes

Disadvantage of GDP per capita

Doesn’t focus on the inequality factor

HDI (Human Development Index)

Life expectancy, education, and income

Advantage of HDI

Assesses human development

Disadvantage of HDI

Ignores inequality factor

Gini Coefficient

Measures income inequality 

Advantage of Gini Coefficient

Simplicity

Disadvantage of Gini Coefficient

Doesn’t reveal cause of inequality

Development indicator: History

Past events that shaped the country like colonisation

Development indicator: Trade & Industry

Trading agreements, trading policies affecting growth

Development indicator: Aid & Debt

Economic help from other countries

Development indicator: Geography

Resources available, accessibility, natural disasters

Development indicator: Political Institutions

Governance that effects development

LEDCs vs MEDCs

MEDCs have advanced industry, technology, and global market access and LEDCs have limited industry and rely on primary products

Reasons to restrict trade

Protect domestic industry, control imports, reduce dependency

Methods of protectionism

Tariffs, quotas, import bans, subsidies

Trade bloc

Group of countries reducing trade barriers between them

Free trade area

Countries remove tariffs internally but maintain external tariffs

Customs union

All members of free trade to set same policies with non-members

Common market

Free trade plus free movement of labor and capital

Monetary union

Shared currency causing lower trade costs, conveniency, price stability, and better relations

Arguments for trade

Promotes economic growth, access to markets, knowledge transfer

Arguments against trade

Can exploit weaker nations, cause unequal benefits, reduce sovereignty

Alternative methods to trade

Microfinance provides financial services to people who don’t qualify for loans.

Bilateral aid

Agreement between 2 countries

Tied aid

Aid with restrictions on supplies from developed country 

National debt

Money owed by a government to cover budget deficits, invest in growth, handle crises.

Effective aid

Supports sustainable development, infrastructure, education, and health

Ineffective aid

Creates dependency, mismanaged funds, and restrictions through tied aid

Causes of debt

Poor financial management, odious debt(previous ruler), and colonialism. 

Dambisa Moyo outlook

Critiques traditional aid and says that aid programs are often unsuccessful. 

Exploitation in trade

Weaker nations may suffer economic, social, and cultural harm

Opium trade case study

British introduced opium to China to balance trade deficit

Effects of opium trade(1839-1860)

Addiction, economic disruption, social decay

First Opium War (1839–1842)

Led to the Treaty of Nanjing, unequal treaty

Second Opium War (1856–1858)

Caused because Chinese police mistreated the British flag on the ship, and war broke out. Led to the Treaty of Tientsin, another unequal treaty 

Long-term causes of Opium War

Cultural differences, economic differences, trade restrictions

Short-term causes of Opium War

Dispute over the opium trade, Lin Zexu’s failed attempt to stop the war

Trigger of Opium War

A Chinese official was murdered by British officers. The British claimed extraterritoriality(people exempted from local law), causing ports to be blocked to foreigners. 

Domestic impact on China

Internal rebellions caused damage increasing reliance on foreign troops to resolve conflict. 

Self-Strengthening Movement

China’s attempt to modernize itself without help of western technology.

Failures of Self-Strengthening Movement

Lack of central support, resistance from Empress, they did not want to alter their traditional beliefs, lack of money

Role of Christian Missionaries

Provided education, healthcare and food. led to cultural suspicion. They wanted to turn Chinese to Christian. 

Boxer Rebellion (1900)

Tried to remove foreigners from China, they were defeated by foreign troops. 

Nepal case study: Trade & Industry

Lack of tariffs and a lot of trading agreements affected local growth negatively.

Nepal case study: Aid & Debt

Foreign aid created dependency and debt traps. 

Colonialism

When one nation takes control of another for its own benefits.

Colonies

Colonies were exploited for resources through forced labor, the establishment of industries to extract raw materials, and suppression through military force 

Effects of colonisation

The former colonies remain dependent on raw material exports, and the continuing flow of wealth to former colonisers. During the colonisation period, the former colonies were underdeveloped in many aspects, and still are. 

Tariffs

Tax on imports

Industrialisation

It can lead to economic growth and job creation, but also cause environmental degradation, social inequality.

IMF 

It finances and helps countries with problems in economic growth

World bank

Provides loans and grants to countries facing poverty. 

Zambia’s debt relief

Zambia got an IMF loan to stabilize its economy, but the next payment was delayed because its foreign lenders haven’t agreed on how to restructure its debt. The IMF can’t release more funds until they make a deal. Although Zambia managed the money well, the delay caused by lenders threatens its economic recovery.

IMF aid to Greece 

Greece faced a severe debt crisis and needed a bailout from the EU and IMF. The EU offered a rescue deal with harsh conditions. The IMF criticized it, saying Greece couldn’t repay without debt relief. Greece accepted the bailout to avoid collapse, causing tensions between the IMF and EU.

Democracy

A system of governance where the population selects its leader. 

Dictatorship

A system of governance where an individual(s) has absolute power through force. 

Rule of law 

Everyone must follow the law

Transparency

Being open and honest about decisions

Anti-corruption measures

Actions or rules used to stop people in power from corrupting.