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Trade and Aid

This Geography quiz asks questions on trade and aid. The GCSE syllabus asks that you realise that there are global variations in ecomomic development and the quality of life. During these studies, you will probably look at several case studies that show the causes (physical, economic and historical) and the consequences (differences in health, wealth and migration) of this uneven development around the world.

One of the key factors in the economic development of a country is trade. Usually, MEDCs are exporters of manufactured goods and they import primary products (e.g. food and raw materials). For LEDCs, the opposite is usually true. Since manufactured products are usually higher value items than primary products, this means that LEDCs are more likely to have a trade deficit and this makes it difficult for them to pay off international debts or improve the infrastructure of their countries.

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The prices of primary products are less stable than the prices of manufactured goods, which means that LEDCs lose out when prices are low.

MEDCS can help in two ways - by increasing trade with LEDCs or by sending aid. Workers in primary industries in LEDCs are often low paid and have very poor standards of living. Fair trade can help these people towards a better life. A fair trade agreement sets minimum standards for the pay and conditions of workers in LEDCs but unfortunately, the idea is not widely enforced or practised but is slowly increasing. One problem with this is that fair trade goods in MEDCs are often more expensive and consumers will often choose the cheaper versions.

Aid takes many different forms. Emergency aid is money, goods and skilled people sent to a poorer country after a natural disaster. Charitable aid is sent to LEDCs by charities like OXFAM and Comic Relief and is a form of long-term aid (also called development aid). This helps to improve the lives of local communities by providing things like clean water and schools - something that we take for granted in an MEDC. Other long-term aid is delivered by other organisations who raise money from both the public and businesses. Often, this long-term aid is linked to sustainable development.

Conditional aid is also called tied aid. This is aid given to a country but with certain conditions attached. A common example used by geography teachers is the building of the Aswan Dam in Egypt. Russia gave Egypt large sums of money so that they could build the dam, in return, the Russian military was allowed to have unlimited access to Egyptian airfields. Finally, the governments of MEDCs also give sums of money to international organisations like the World Bank and World Health Organisation who decide where to give aid.This type of aid is called multilateral aid.

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  1. Some people think that giving aid to poorer countries is not a good idea. Which of the following is NOT an argument against giving aid?
    Aid is usually given for the right reasons but can sometimes bring unexpected outcomes which can be used to argue against helping LEDCs
  2. If poorer countries could process their raw materials into manufactured products, they could make more money from exports, so why does this not happen on a large scale?
    Importing the machinery from MEDCs is expensive and setting up the infrastructure takes time
  3. Which of the following satements about international trade is correct?
    Many MEDCs export primary products, for example, a large proportion of the Australian economy is based on the export of primary products like iron ore, wool and coal
  4. Multilateral aid is given through:
    The governments of many MEDCs donate some of their income to international organisations like the World Bank and World Health Organisation who then decide where aid should be given and how much. It is called multilateral because the money comes from several different countries
  5. Fair trade products are becoming more widespread and include beverages, textiles, craft items and chocolate. Fair trade agreements ensure that the producer (or employees of the producer) receive:
    A fair trade agreement requires employers to set minimum standards for the pay and conditions of their workers in order to give them a better standard of living
  6. The difference between the money gained from exports and the money spent on imports is called:
    It is also sometimes referred to as the balance of international payments
  7. What form does aid take?
    Aid can take many forms, depending on why it has been given. Emergency aid for example is often sending food, shelter, medical supplies and specialist rescue workers to support an LEDC after a natural disaster like a hurricane or tsunami has happened whereas multilateral aid is usually a sum of money given to support a specific project
  8. If a country spends more on imports than it gains from export, it has a:
    Other phrases you may hear that mean the same are 'negative balance', 'unfavourable balance' and 'trade gap'
  9. Aid sent to a country following a major earthquake is described as being:
    Long-term aid and development aid are the same
  10. In the 1990s, the British government gave Malaysia a large sum of money to help them to develop a hydroelectric power scheme. In return, it demanded that Malaysia bought military supplies and weapons from the UK. What is this type of aid called?
    The conditions of aid like this normally benefits the government of the MEDC rather than the country receiving the aid

Author: Kev Woodward

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