Ch20: Economic Inequality

• Reasons for Economic Inequality:

  • Trade - developed countries purchase raw material from developing countries at an unfairly low price. They then make a product from the raw material and sell it at a much higher value.
  • Colonialism - the Age of Exploration led to Europeans stealing all the wealth from Native Americans and the continent of Africa, making those areas poverty stricken and Europe a wealthy area.
  • Corruption - developing countries with corrupt leaders use the government revenue for their own purposes instead of spending it for the country
• Solutions to Economic Equality:

  • Fairtrade - people from the developing world should receive a fair price for their product. Fairtrade is an international movement that gives farmers in the developing world a better deal and better wages.
  • Debt - the loans along with interest accumulated, given to developing countries could be cleared
• Types of Aid:

  • Emergency / humanitarian aid - aid in the form of food, water and basic necessities, given to countries experiencing natural disasters or war
  • Development aid - aid in the form of money or people, given to a developing country over a long period of time.
  • Tied aid - aid of any form that comes with conditions, such as the aid-receiving country being forced to purchase goods from the aid-giving country.
  • Bilateral aid - aid given from one country directly to another country
  • Multilateral aid - aid given by organisations such as the United Nations, the World Bank and the EU.
• Advantages and Disadvantages of Aid:

  + Vital for saving lives

  + The country drastically improves

  - Countries become dependent on aid

  - Corruption can lead to aid being stolen