What makes global inequalities worse?
Most countries have had or are having a hard time developing to a high standard. Trade, debt, dirty water, environmental and natural disasters can all make a countries situation worse. This helps to exacerbate the gap between countries that are doing well, and countries who are finding things tougher and tougher. This is the Development Gap.
Economic Factors
1. Poor trade links.
Trade is the exchange of goods and services. World trade patterns- who trades with who, in which trading blocs or individually, can seriously affect a countries economy. If a country is finding it hard to trade, or to produce the goods that are wanted on the international market, this can affect their economy. This will in turn mean that they are less developed.
2. Lots of debt
Very poor countries aren't helped because they are often in lots of debt. They will often borrow money from other countries or international organisations and will sometimes apply to institutions like the UN for emergency aid to support them. But this only makes their situation worse. If they borrow money from other countries, they will be charged interest which they cannot afford to pay. This is why some people think that LIC debt should be cancelled because at current rates (when interest is low), they still aren't able to pay it back at the rate required. If a country spends all of its spare money paying back expensive loans, it doesn't have money to spend on schools, health care or improving urban spaces like Kibera in Nairobi.
Why did countries get into so much debt?
From the Jubilee debt campaign:
By the end of the 19th century most of the world was controlled by Europe. Europeans exploited the raw materials of other countries and oppressed their peoples. The worst example of this oppression and exploitation is the slave trade. Most African nations gained independence from European rule in the 1960s, usually after a long struggle. This was a time of great hope and great expectation; the people of these newly independent countries believed that after decades of foreign rule they would finally gain political freedom and have leaders who would look after their interests and provide them with the basic social services that had been so badly neglected. All of this would take great sums of money of course, but years of foreign rule had left their economies weak. Often the only way to provide for their people was to borrow from the former foreign powers. Unfortunately, most of the lenders didn’t have the interests of the citizens in borrower countries in mind. More often than not, poor countries were encouraged to take on massive loans for geopolitical, not sound economic, reasons. This was the era of the Cold War; the US and Soviet Union were competing for global dominance and more than willing to buy the political allegiance of newly independent countries with ‘development’ loans. As hostilities between the two superpowers deepened, they lent more and more recklessly. In the 1970s it was very easy to borrow money. Oil-producing countries had hiked their prices and made huge sums of money that they deposited in US banks. This caused interest rates to plummet, so to avoid an international financial crisis, and to provide enough money to ensure other countries could keep buying their products, banks decided to lend a lot more money to poor countries as quickly as they could. They did this without much thought about how the money would be used or the ability of the borrowers to repay it.
Global recession arrived in the 1980s and with it an unprecedented rise in interest rates led by the US under the newly elected President Reagan. Some poor countries found the interest they had to pay back on their loans had more the doubled. At the same time, caused the price of the raw materials they exported (cash crops they were encouraged to grow
by the West such as tea, coffee, cotton and cocoa) to fall dramatically. The trap was sprung – poor countries were earning less than ever for their exports and paying more than ever on their loans and what they needed to import. They were caught in a vicious circle of unpayable debt, and had to take out new loans just to pay off the interest on their original loans.
3. Primary industry
If a country earns its money from Primary sector (anything that is produced directly from the earth e.g. mining or farming), it is likely that that countries economy will be smaller than a country like the UK or Japan. Countries whose industry focusses on manufacture or R&D (research and development) is likely to earn more money from the things that it exports. But a country like Ethiopia who makes its money from agriculture will earn less, and so be poorer as a whole country.
Social Factors
1. Water Quality- poor water quality spreads disease. This debilitates people and means that they cannot work. This in turn means that they are poor and therefore cannot put money back into their countries economy. Many countries in the Tropics suffer from water borne diseases such as cholera and dysentry. Malaria is also incredibly common- its not in the water, but water brings mosquitos which carry the disease.
2. Health- if people are unwell, they cannot work, and so in countries who cannot afford free healthcare, or have a system in place for all to have access to healthcare, the development of a country is limited, because people get ill from the environment or from other sources, and cannot get illness treated. If the population is well, they can work and the country prospers.
3. Education- the more a country educates its people, the better off they are. In Europe people receive far more education than in Africa, so they tend to have higher paid jobs. In the UK it is now compulsory for children to attend education in some form until they are 18.
4. The status of women- women who have higher status in a country are more likely to work. This means that they are more likely to earn a salary and spend that money, benefitting the economy, and so in turn the country.
Environmental Factors
1. Poor climate- If a country is really hot, or really cold, or too dry or too wet, growing crops can prove a challenge. Crops need, not only sunlight, but a continuous water supply. The growing season will be shorter or longer depending on where you are in the world. This reduces the amount of food produced, and in turn means that farmers may not have enough food for themselves, let alone extra that they can sell on.
2. Poor farming land- in some countries, farming hasn't been well managed, and good farming practices haven't been implemented. This combined with poor soil, or steep slopes, will mean that growing crops can be very challenging. In some countries such as Ethiopia (our Fair trade example), farmers are given land and have to farm it. Owing to a lack of education, they till the same soil year on year, and attempt to grow the same crop, reducing their yield.
3. Lots of natural hazards- think about Haiti. Haiti had a serious earthquake, an outbreak of disease and then a hurricane. Its no wonder that the country has hard a tricky time in recent years. Countries who have a lot of natural disasters (earthquakes, hurricanes, tornadoes, floods etc) spend a lot of money rebuilding and so cannot spend their money on developing the country.
4. Few raw materials- you need resources to process and sell. If you don't have them, you can't make money out of them, and this is true of some smaller countries. Particularly vulnerable countries are those that are landlocked because they cannot exploit the sea as well as the land.
Exam questions you could be asked:
June 2015:
Explain how social and economic factors make global inequalities worse.
[8 marks]
[SPaG 3 marks]
Our Case Study for this is Cyclone nargis.
Economic Factors
1. Poor trade links.
Trade is the exchange of goods and services. World trade patterns- who trades with who, in which trading blocs or individually, can seriously affect a countries economy. If a country is finding it hard to trade, or to produce the goods that are wanted on the international market, this can affect their economy. This will in turn mean that they are less developed.
2. Lots of debt
Very poor countries aren't helped because they are often in lots of debt. They will often borrow money from other countries or international organisations and will sometimes apply to institutions like the UN for emergency aid to support them. But this only makes their situation worse. If they borrow money from other countries, they will be charged interest which they cannot afford to pay. This is why some people think that LIC debt should be cancelled because at current rates (when interest is low), they still aren't able to pay it back at the rate required. If a country spends all of its spare money paying back expensive loans, it doesn't have money to spend on schools, health care or improving urban spaces like Kibera in Nairobi.
Why did countries get into so much debt?
From the Jubilee debt campaign:
By the end of the 19th century most of the world was controlled by Europe. Europeans exploited the raw materials of other countries and oppressed their peoples. The worst example of this oppression and exploitation is the slave trade. Most African nations gained independence from European rule in the 1960s, usually after a long struggle. This was a time of great hope and great expectation; the people of these newly independent countries believed that after decades of foreign rule they would finally gain political freedom and have leaders who would look after their interests and provide them with the basic social services that had been so badly neglected. All of this would take great sums of money of course, but years of foreign rule had left their economies weak. Often the only way to provide for their people was to borrow from the former foreign powers. Unfortunately, most of the lenders didn’t have the interests of the citizens in borrower countries in mind. More often than not, poor countries were encouraged to take on massive loans for geopolitical, not sound economic, reasons. This was the era of the Cold War; the US and Soviet Union were competing for global dominance and more than willing to buy the political allegiance of newly independent countries with ‘development’ loans. As hostilities between the two superpowers deepened, they lent more and more recklessly. In the 1970s it was very easy to borrow money. Oil-producing countries had hiked their prices and made huge sums of money that they deposited in US banks. This caused interest rates to plummet, so to avoid an international financial crisis, and to provide enough money to ensure other countries could keep buying their products, banks decided to lend a lot more money to poor countries as quickly as they could. They did this without much thought about how the money would be used or the ability of the borrowers to repay it.
Global recession arrived in the 1980s and with it an unprecedented rise in interest rates led by the US under the newly elected President Reagan. Some poor countries found the interest they had to pay back on their loans had more the doubled. At the same time, caused the price of the raw materials they exported (cash crops they were encouraged to grow
by the West such as tea, coffee, cotton and cocoa) to fall dramatically. The trap was sprung – poor countries were earning less than ever for their exports and paying more than ever on their loans and what they needed to import. They were caught in a vicious circle of unpayable debt, and had to take out new loans just to pay off the interest on their original loans.
3. Primary industry
If a country earns its money from Primary sector (anything that is produced directly from the earth e.g. mining or farming), it is likely that that countries economy will be smaller than a country like the UK or Japan. Countries whose industry focusses on manufacture or R&D (research and development) is likely to earn more money from the things that it exports. But a country like Ethiopia who makes its money from agriculture will earn less, and so be poorer as a whole country.
Social Factors
1. Water Quality- poor water quality spreads disease. This debilitates people and means that they cannot work. This in turn means that they are poor and therefore cannot put money back into their countries economy. Many countries in the Tropics suffer from water borne diseases such as cholera and dysentry. Malaria is also incredibly common- its not in the water, but water brings mosquitos which carry the disease.
2. Health- if people are unwell, they cannot work, and so in countries who cannot afford free healthcare, or have a system in place for all to have access to healthcare, the development of a country is limited, because people get ill from the environment or from other sources, and cannot get illness treated. If the population is well, they can work and the country prospers.
3. Education- the more a country educates its people, the better off they are. In Europe people receive far more education than in Africa, so they tend to have higher paid jobs. In the UK it is now compulsory for children to attend education in some form until they are 18.
4. The status of women- women who have higher status in a country are more likely to work. This means that they are more likely to earn a salary and spend that money, benefitting the economy, and so in turn the country.
Environmental Factors
1. Poor climate- If a country is really hot, or really cold, or too dry or too wet, growing crops can prove a challenge. Crops need, not only sunlight, but a continuous water supply. The growing season will be shorter or longer depending on where you are in the world. This reduces the amount of food produced, and in turn means that farmers may not have enough food for themselves, let alone extra that they can sell on.
2. Poor farming land- in some countries, farming hasn't been well managed, and good farming practices haven't been implemented. This combined with poor soil, or steep slopes, will mean that growing crops can be very challenging. In some countries such as Ethiopia (our Fair trade example), farmers are given land and have to farm it. Owing to a lack of education, they till the same soil year on year, and attempt to grow the same crop, reducing their yield.
3. Lots of natural hazards- think about Haiti. Haiti had a serious earthquake, an outbreak of disease and then a hurricane. Its no wonder that the country has hard a tricky time in recent years. Countries who have a lot of natural disasters (earthquakes, hurricanes, tornadoes, floods etc) spend a lot of money rebuilding and so cannot spend their money on developing the country.
4. Few raw materials- you need resources to process and sell. If you don't have them, you can't make money out of them, and this is true of some smaller countries. Particularly vulnerable countries are those that are landlocked because they cannot exploit the sea as well as the land.
Exam questions you could be asked:
June 2015:
Explain how social and economic factors make global inequalities worse.
[8 marks]
[SPaG 3 marks]
Our Case Study for this is Cyclone nargis.