Tackling the Development Gap (Edexcel IGCSE Geography)

The World Trade Organisation

Strategies to solve the development gap

• There is no one solution to the development gap

• There is often a dispute as to whether trade or aid is better for development

• Countries around the world contribute differing amounts to international development in the form of aid

The World Trade Organisation (WTO)

• Trade is one solution with the idea that if countries can trade more effectively their wealth will increase and they can invest in the development

• The aim of the WTO is to help its members use trade as a means to raise living standards, create jobs and improve people's lives

• Developed countries and the largest economies dominate the WTO 

• Developing countries do not always have the same access to markets as developing and emerging countries

• The benefits of trade are not always shared amongst the population. In India and China, the gap between the wealthy and those living in poverty is widening

• Developing country's main exports are usually primary goods and these do not create the same profits as manufactured products

Debt Relief

• Many developing and emerging countries owe money to other countries

• Repayments and interest are so expensive they do not have money left to spend on development

• Debt relief reduces the payments so that money can be used to on development. For example, improvements in infrastructure, education, healthcare 

• Debt relief can also mean that the debts are written off

• In 1996 the Heavily Indebted Poor Countries (HIPC) initiative was launched which aimed to ensure that no country faces a debt burden it cannot manage

• In 2005 as part of the Sustainable Development Goals (SDGs) the Multilateral Debt Relief Initiative (MDRI) was added to supplement the HIPC and allowed for 100% debt relief on any money owed to the IMF, World Bank or African Development Fund (AfDF)

Fair Trade

• Approximately 5 million people benefit from Fair Trade 

• The Fair Trade system works with over 1.9 million farmers in 73 countries

• In 2020 £169 million was paid in Fair Trade premiums

• Fair Trade items now range from coffee to footballs

Microcredit

• Microcredit refers to loans given to people to start a small business

• The loans are generally small US$100-500 to start with but can be increased as a business grows

• Usually they are given to people on very low incomes who would not get a bank loan

• Interest rates are very low or in some cases, the loan is interest-free