reducing the development gap

• What strategies can reduce the global development gap?

  • Investment
  • Aid
  • Fair trade
  • Using intermediate technology
  • Microfinance loans
  • Industrial development
  • Debt relief
• What is foreign-direct investment (FDI)?

  Foreign-direct investment is when people or companies in one country buy or invest in infrastructure in another.
• What can foreign-direct investment lead to?

  Better access to finance, technology and expertise, as well as improved infrastructure and industry, and an increase in services.
• Give an example of foreign-direct investment.

  Vietnam has received FDI worth more than US $180 billion, which helped to develop many industries, such as motorbike manufacturing and telecommunication.
• What is aid?

  When money or resources (e.g. food and medicine) are given to a country by a charity or foreign government.
• What is money provided by aid used for?

  Development projects, e.g. constructing schools, building dams and wells and providing farming knowledge and equipment.
• Give an example of aid being used to reduce the global development gap.

  In 2018 the UK provided over £180 million in aid to South Sudan, funding almost 20 projects that included improving access to water, healthcare and education.
• What are the limitations of providing aid to reduce the global development gap?

  Sometimes it is wasted by corrupt governments or once the money runs out, projects can stop working if there isn't enough local knowledge and support.
• What is the fair trade movement and how does it work?

  The fair trade movement is all about farmers in LICs getting a fair price for the goods they produce, e.g. coffee and bananas, allowing them to provide for their families. Companies who want to sell products labelled as 'fair trade' have to pay producers a fair price and buyers pay extra on top of that so farmers receive a premium to help develop their local area.
• Give an example of farmers using fair trade premiums to reduce the global development gap.

  In 2016, Fairtrade tea farmers in Malawi used some of their premium to expand their local hospital, build a new school and install a pipeline for clean water.
• What are the limitations of fair trade?

  In some cases, only a tiny proportion of the extra money reaches the produces, while the rest boosts retailers' profits.
• What is intermediate technology?

  Includes using tools, machines and systems that improve quality of life but are also simple to use, affordable to buy or build and cheap to maintain.
• Give an example of using intermediate technology to reduce the global development gap.

  Solar-powered LED light bulbs in used in some parts of Nepal where the only other lighting options are pollution and dangerous kerosene lamps or wood fires. This allows people to work, and children to study after dark. As a result, skills, incomes and industrial output can increase.
• What is microfinance?

  When small loans are given to people in LICs who may not be able to get loans from banks. This enables them to start their own businesses and become financially independent.
• Give an example of where microfinance loans have been used to reduce the global development gap.

  In the Amhara region of Ethiopia, people who joined a microfinance organisation benefited from higher incomes and were able to invest in more livestock.
• What are the limitations of microfinance?

  Although microfinance works for some people, it can also cause problems by encouraging people to get into debt. It's also not clear that it can reduce poverty on a large scale.
• How does industrial development help to reduce the global development gap?

  In countries with a very low level of development, agriculture makes up a large portion of the economy. Therefore, developing industry boosts GNI and development, as productivity, skills and infrastructure are improved.
• What is debt relief?

  When some or all of a country's debt is cancelled, or interest rates are lowered, meaning the country has more money to spend on development.
• Give an example of how debt relief has been used to reduce the global development gap.

  Zambia had $4 billion of debt cancelled in 2005. The following year, the country had enough money to start a free healthcare scheme for millions of people living in rural areas.