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Aid versus Trade

Paper type: Essay
Pages: 7 (1652 words)
Categories: Economics, Economy, Poverty, Society, Trade, Trade And Commerce
Downloads: 10
Views: 433

The help verses trade dispute reveals the strong distinction and sizable reduction in serious hardship in emerging economies such as China, Thailand and South Korea that have actually welcomed international trade, with the relentless hardship in numerous aid-dependent African nations. The debate of whether foreign aid is helpful or damaging to a country in requirement can be viewed as foreign help directed to Africa has significantly grown yet this has not benefited the continent as it is still thought about ‘establishing’ and is in a state of widespread hardship (Alesina, Dollar, 2000).

Asia, which was as soon as also thought about a developing nation has actually established a strong economy and infrastructure with not help that, was presented in Africa. Rather than seeing the 2 arguments as aid or trade, it ought to be seen as help for trade. (Rotberg, 2009).

TRADE HAS A SUBSTANTIAL LONG-LASTING AFFECT ON THE ESTABLISHING NATIONS ECONOMY; IT IS THE SECRET TO ADVANCEMENT. IT PERMITS THE COUNTRY TO DEVELOP STRONG TRADING RELATIONSHIPS WITH OTHER NATIONS, THEREFORE ENABLING A REGULAR CIRCULATION OF FUNDS INTO THE DEVELOPING NATION.

TRADE IS NECESSARY AS IT ENABLES THE COUNTRY TO USE ITS OWN NATURAL RESOURCES, WHICH NOT ONLY ADVANTAGES THEMSELVES BUT ALSO THE WORLD OF TRADE. AFRICA HAS BEEN GIVEN IN THE PAST 60 YEARS AT LEAST $1 TRILLION OF DEVELOPMENT-RELATED HELP; EVEN WITH THIS HUGE INCREASE OF ECONOMY THE INCOME TODAY IS LOWER THAN IT WAS IN THE 1970S, AND MORE THAN 50% OF THE POPULATION LIVE ON LESS THAN ONE DOLLAR A DAY AND STILL REMAINS IN A SIGNIFICANT STATE OF HARDSHIP (MOYO, 2009).

Help is useful for establishing nations going through a period of unsteadiness and have actually gone through a major crisis e.g. natural disaster, this is when aid is most required, as a country is left with nothing and needs initial funding to enable the country to begin rebuilding and trading with outdoors nations. Help speeds up the economy of underdeveloped nations but it is likewise given up the form of bilateral aid, multilateral aid, humanitarian emergency relief, NGO collaboration support and Technical assistance and community involvement. Help frequently has a positive impact in developing nation with good policies and has little or no effect when countries have bad policies.. (Burnside and Dollar (2000)

Trade is a necessary tool in order to significantly develop and improve a third world countries economy and to reduce poverty. Trade is seen as difficult in these countries as there is sometimes a lack of information, institutions and infrastructure, which makes it difficult to efficiently trade globally. Advancing education, science and technology are important in order to help improve Africa’s development. In order to improve the many economical and poverty issues they’re confronted with, promoting this industrial development will help ensure long-term economic growth which will allow the continent to not be so aid dependant (Astier, 2006). Aid for trade increases the trade performance of developing countries; a small increase of 1 percent directed for trade, which is about $11.7 million, could generate amounts of up to $818 million (Helble, Mann, Wilson 2009)

There are various economic, social, and political factors that can cause countries to remain in a prolonged widespread poverty, almost half the world live on less than $2.50 a day (Shah, 2013). Some economical factors include the lack of improvement in agriculture, the faulty industrialisation, and unequal economic distribution. Social factors that cause countries to remain in this state are the strong religious aspects of a country. Politics is full of corruption and how many political leaders in such countries rather than have the countries best interest at heart would prefer to enhance their own wealth.

A prominent cause of poverty is the economic position of a country. A lot of countries lack advancements in agriculture, the absence of modern machinery, tools, facilities etc. result in the lack of development the current systems that are in place are often not sufficient and cannot provide for the local community. This can be seen in ineffective industrialisation, there is not enough finance in these countries to provide skilled and technically trained workers, thus is it difficult to provide employment. Another economical factor is the unequal distribution of wealth. Wealth is often distributed to a limited group of people, the wealth in such poor countries is often skewed e.g one is either extremely wealthy or extremely poor, thus leaving the majority of the country in a state of poverty and unemployment.

The social factors that contribute to countries with a high poverty level are mainly religious. In these countries material goods are not high in value. It is also evident that education in poverty-ridden countries is also not very highly valued; generally the emphasis is for young children to get a job to help the families’ income rather than get a better education and get a better job. Often there are socio religious aspects that also restrict advancements, such as marital agreements, putting these countries in a continual downward spiral into a worse state of poverty (Crabtree, 2010).

The political factors that lead a country to remain in poverty can come down to the leaders that are meant to ‘provide’ for the country are hugely responsible for the destruction and poverty of the country. Administration can be full of corruption and ineffectiveness, and rather than enrich the countries overall wealth they will enrich there own wealth at the cost of the countries development. As a result of this political inefficiency and dishonesty there has been no real advancements in countries where poverty is high, they are still in a strong downward spiral of poverty.corruption has to stop before the continent can ever develop (Morrissey, 1991).

The positive impact of aid and trade can be slow in some countries because of four factors physical capital, human capital, natural resources and the countries technological knowledge. The things that can be done to help these countries that are poverty stricken start with improving its level of productivity and growth as a country’s standard of living depends on its ability to produce goods and services (Shah, 2013). Nearly 21 percent of people in third world countries lived at or below $1.25 a day. With that measure based on latest data available, 1.4 billion people live on or below that line, meaning in 2010, 1.22 billion people lived on less than $1.25 a day. Almost half the world-over three billion people-live on less than $2.50 a day and at least 80% of humanity lives on less than $10 a day. (Okonjo-Iweala, 2007)

The physical capital of a country can be seen as its evolution, their production factory, their production process, and infrastructural development. In order for a country to improve, so must the stock of equipment and structures that are used to produced these goods and services (Sachs and Warner, 1999). Human capital is an essential part of the improvement of a country as human capital relates to the skills and knowledge that workers gain through various types of training, education and experiences, if the countries human capital in improved the nations ability to produce quality goods and services will increase accordingly. The development of infrastructure is needed in order to facilitate better medical, education, and working system. (Khumbah, Foote, 2014)

A countries natural resources, their land, water, mining, both renewable and non – renewable resources are very important for a countries economy, and can be highly productive in producing goods and services of a high quality, and rather than be abused by other countries it can allow the suffering countries to prosper (Kaufman, 2002). Technological knowledge is educating a countries most effective ways to produce goods and services. In order for a country to improve overall they need to understand new technology, there must be training and knowledge in order to decrease poverty.

One billion children live in poverty, six hundred and forty million don’t have sufficient shelter, four hundred million don’t have access to safe water, two hundred and seventy million have no access to health services and nearly eleven million died in 2003 before they reached the age of five (Shah, 2013). Poverty is a massive killer, although this as well as diseases and illnesses can easily be prevented, countries that do and do not suffer from poverty often don’t advertise the desperate need for change. (Rotberg, 2009)

Aid is not the cure for the developing world’s problems but it has been helpful in minimizing suffering and increasing development. Aid has helped improve the health, education and trade systems in developing countries. Economic growth and global trade are crucial to reduce poverty in the long term, but in order to continually reduce global poverty both trade and aid are fundamental.

References

  1. Astier, H. (2006, 1st February). Can aid do more harm than good? Bbc
  2. Khumbah, K., & Foote, M. (JULY 31, 2014). AFRICA NEEDS SCIENCE, NOT AID. Retrieved, 22nd august, 2014, Retrieved from http://www.nytimes.com/2014/08/01/opinion/africa-needs-science-not-aid.html?_r=0
  3. Aid versus trade. Okonjo-Iweala, N. (Director). (2007, July).[Video/DVD] TEDGlobal.
  4. Robert I. Rotberg. (2009). CHINA INTO AFRICA: TRADE, AID, AND INFLUENCE . Brookings Institution Press: Shah, A. (2013, 24th March). Causes of poverty. Global Issues
  5. Wilkinson, M., & McGregor, L. (2013). Preying on paradise Burnside, C. and D. Dollar (1997), `Aid, Policies and Growth’, Policy Research WorkingPaper no. 1777, World Bank, forthcoming in the American Economic Review
  6. What is Human Development?, Human Development Reports, United Nations Development Program Sachs, Jeffrey and Andrew Warner (1999), “The Big Push, Natural Resource Booms and Growth”, Journal of Development Economics, 59, 43-76.
  7. Human Development Report (HDR), United Nations Development Program, November 27, 2007,
  8. Kaufmann D, Kraay A 2002 ‘Growth Without Governance’ Economia Fall 2002, Vol. 3, No. 1
  9. Alberto Alesina and David Dollar (2000), “Who Gives Foreign Aid to Whom and Why?” Journal of Economic Growth (March), pp. 33-63
  10. Morrissey O. _An Evaluation of the Economic Effects of Aid and Trade Provision. Journal of Economic Studies 1991;28:104-29._
  11. Steve Crabtree (2010) Religiosity Highest in World’s Poorest Nations http://www.gallup.com/poll/142727/religiosity-highest-world-poorest-nations.aspx

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Aid versus Trade. (2016, Aug 05). Retrieved from https://studymoose.com/aid-vs-trade-essay

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