Economic Inequality

• Developed economies:

  • Very strong economies
  • Well-developed and wealthy countries
  • Heavily industrialised
• Developed economies:

  • Majority of workforce is employed in secondary and tertiary sectors
  • Developed countries have good healthcare, high standard of education, high-quality infrastructure
  • E.g. Norway
• Economies in transition:

  • Economies of these countries known as tiger economies
  • Industrialisation (manufacturing) is occurring rapidly
• Economies in transition:

  • Focus of these countries mainly on exporting goods
  • Wages increasing slowly
  • Improved standard of living
  • E.g. Brazil
• Developing economies:

  • Economies of these countries are reliant on primary sector activities (agriculture, fishing)
  • Poor infrastructure
  • Extreme poverty
• Developing economies:

  • These countries tend to be affected by famine, war, high birth rates
  • E.g. Sierra Leone/Sudan
• Measuring economic development: 

  • The World Bank measures levels of economic development mainly looking at a country's Gross National Income (GNI) per person
  • A country's GNI is all of the income earned by a country's residents and businesses at home and abroad
• Measuring economic development: 

  • Another way of measuring economic development is the Human Development Index (HDI)
  • Countries can be compared to each other based on a number of indicators, including:
  • Literacy
  • Life expectancy at birth
  • Standard of living
• Measuring economic development: 

  • Standard of living is calculated using Purchase Power Parity (PPP) as well as income
  • PPP is all about how valuable money is in a country. €10 in Brazil will get you more than it does in Ireland
•  

  North/South Divide: reasons for economic inequality:

  • Trade
  • Colonialism
  • Debt
  • Corruption
• Trade

  • Wealthy countries buy raw materials from developing countries at low prices. They process these materials into finished goods and sell them for a much higher value
• Trade

  • Many multinational corporations (MNCs) exploit countries. The produce is seen as a cash crop in developing countries, so the people there can become dependent on just a few exports
• Trade

  • MNCs sometimes set up in poorer countries to take advantage of the low wage expectations to make more profit
• Trade

  • In some developed European countries, farmers receive subsidies from the EU for their produce, with which developing world farmers cannot compete
• Colonialism

  • During the Age of Exploration from the 15th to the 17th century, many European countries conquered lands in South America and later in Africa
• Colonialism

  • The colonists exploited the raw materials and mineral wealth in the colonised countries to increase their own wealth. This stripped those countries of their natural resources and left them in a state of poverty
• Colonialism

  • Since gaining independence, many former colonies still depend on their former colonisers to buy their exports. This is known as neo-colonialism
• Debt

  • Many developing countries owe foreign banks huge sums of money because they have borrowed money to help develop the country. This is called debt
  • Money that should be used to provide basic healthcare and education is often used to repay loans
• Corruption

  • Some developing countries have corrupt leaders. These leaders often take money intended for important services like healthcare and education, and use it to increase their own personal wealth or to buy weapons instead

   
• Solutions to economic inequality

   

  • Fairtrade
  • Debt cancellation
  • Aid
• Fairtrade

  • People in the developing world should receive a fair price for their produce
  • Taxes on goods imported from developing countries should be abolished
• Fairtrade

  • MNCs must stop the exploitation of workers, the use of child labour, and the payment of low wages in developing countries
  • Fairtrade is an international movement which gives farmers a better price, which allows them to improve their lives
• Debt cancellation

  • The loans could be cleared. They have high interest rates - countries cannot afford repayments
• Debt cancellation

  • In 2005, the developing world owed over $500 billion
  • A call for an end to world debt resulted in their debt cancelled -  money could go into health, cars, education, etc.
  • However, 2017 figures show that the developing world still owes more than $4 trillion to the World Bank
• Aid

  • The developing world needs assistance from richer countries. This is called aid
  • It is essential that aid reaches its intended targets within the developing world - not taken by corrupt politicians
  • If aid is focused on education, then communities can learn to help themselves
• Emergency aid/Humanitarian aid

  • Comes in the form of food, water, medicines, and basic supplies given following a natural disaster such as an earthquake or famine, or in times of war
• Development aid

  • Provides help over a long period of time focusing on the development of healthcare, education, and infrastructure. It can be in the form of money or personnel
• Bilateral aid

  • Aid from one country directly to another country, e.g. the Irish government provides aid to Ethiopia

   
• Multilateral aid

  • Aid provided by organisations, such as the United Nations, the World Bank, and the European Union. Governments of member states contribute money for development programmes run all over the world
• Positives of aid

  • creating a better relationship between two countries
  • saving of lives after a natural disaster, or in times of war
  • healthcare and education improves in a developing country when aid is given
• Negatives of aid

  • developing countries can get very dependent on their aid
  • corruptive government can lead to aid being stolen
  • can lead to huge amounts of money being spent on arms and weapons
• NGOs

   

  • Stands for Non Governmental Organisation
  • Ireland has many NGOs, many of which are supported by Irish Aid, that contribute to poorer, developing countries
• NGOs

  • These organisations do not give money directly to the governments of developing countries, instead they give aid in the form of humans, and teachers
  • E.g. Trócaire, Concern, Bóthar