Countries with low levels of economic development are defined by the United Nations as having three main problems; low income, human resource weakness and economic vulnerability. These come from a multitude of factors varying from the geographical position of a country to the political factors within a country. This makes it very hard to understand or know whether to help them or leave them to develop themselves. However what is clear as that LDC’s do face major challenges.
The most serious of risks is the poverty cycle but there are also risks of corruption from any aid given and also the long term economical problems that can be faced if this occurs. There numerous factors to be considered and many different organisations and governments see different routes to the problem. There are some examples of countries that have grown in wealth seemingly on their own with minimal help from developed countries. Overall therefore there is much debate to both the need for countries to help and the affect this has, although there is no debate that countries at low levels of economic growth face great challenges.
One of the main suggestions for them needing help would be to encourage and allow them to trade. This is because many developing countries have less capital and skilled workers than more developed countries meaning the goods they produce are of a lower quality than other countries. This therefore makes it harder for them to trade and if taxes and tariffs are added on top of this then they will find it very difficult to trade. Therefore developed countries need to encourage them to trade as this will help employ more people in that country.
This will improve the living standard within a country as more people will begin earning a living and can then begin to escape the poverty cycle and send their children to school that can become more skilled in the future. It’s also worth noting that it is often cheaper to employ people in poorer countries meaning goods can be produced for import to developed countries at a lower cost than if employed internally. Therefore this will encourage TNC’s to enter the countries and begin setting up factories and sweat shops within these countries.
An example of this is Nike in Vietnam who has a very large factory. The average wage for a worker at this factory is 55$ a month, over three times the local average. This allows people to increase their personal wealth, buying mores goods and therefore due to the accelerator affect, the economical model that says for every dollar spent within a country the effects of this are much greater than a single dollar, and there will be a much greater increase in wealth throughout the country.
Nikes factory also means that workers have a clean, safe job rather than the seasonal agricultural work they are used to which can also be affected by the fact that monsoon rains in Vietnam can destroy crops meaning a lack of food for large numbers of people. They also stop child labour, a big worry for TNC investment in developing countries s Nike do not allow under 16’s to work on their clothing or under 18’s on their shoes. This means that children cannot drop out of school to work for them and this, along with other factors has meant that more Vietnamese children are in school than ever before.
Therefore it seems imperative and important for both governments to encourage trade and to encourage TNC’s to invest in these countries as these can increase the money earned by people within the country and also provide a more stable job reducing the affects of natural disasters or climatologically related issues. However there are suggestions that there is no need for countries to invest in developed countries as they have large amounts of mineral and natural resource wealth. In Sub-Saharan Africa, the area of the world with 30 of the worlds 59 LDC’s in, the UN has said that there is an ‘abundance of natural resources there’.
This suggests that there are plenty of resources for the country to use to develop by trading these with other countries. Most specifically China who already buys half of all metal traded out of china. This can be seen as bilateral trade between China and Nigeria was 3 billion USD in 2006, this was a tenfold increase in 8 years which helped Nigeria’s GDP to nearly triple from 1995 to 2014. Nigeria is also one of the fastest growing economies in the world, expected to grow by 7% in 2014. This will help to bring more wealth and riches into the country and help to employ more people.
Nigeria also has large numbers of factories being created and is already 3rd for factory output within Africa. Nigeria was able to become a developed country in 2002 because of this trade, most of which became naturally as they got little help from western countries who still isolated them due to the military dictatorships of the 1980’s. Therefore we can suggest that many of the countries that are less developed have lots of natural recourses and can increase their own natural wealth by trading with their natural resources.
This suggests that there is no necessary need for developed countries to help rather than to buy their natural resources. This would occur naturally just like with Nigeria has with China. However the problem with this is the risk of overreliance on one country. As china is by far the largest importer in the world, total imports is more than 50% more than the United States which is the second largest importer in the world. Chinas imports make up 13% of the entire worlds imports, therefore if they decided to they could use this to both influence countries politically and economically but also force countries to give them a better deal.
Already half of all exports from Africa go to China. Therefore there are already worries that China is using this to gain influence over many African countries, including Nigeria. Therefore although it could be argued that assistance from other countries is not needed it is clear that if so the situation has to be monitored so that there is no risk of over reliance or political influence, something that is hard to police. However one could argue that if trade is the only way for LDC’s to develop then this won’t help those stuck in the poverty cycle, often due to illnesses rife throughout Africa.
Malaria is the main reason for this but also AIDS/HIV as these is all mainly prevalent in Sub-Saharan Africa. 85% of malaria cases occur in Africa and due to the effects of malaria: muscle pain and diarrhoea, can be particularly damaging for individuals forcing them to take time off work reducing their total income. The latter is also particularly bad as many Africans struggle to have enough clean water to live on and as diarrhoea can make you dehydrated this can mean that many Africans die leaving a family with a lack of income and at risk of becoming ill themselves.
This creates what is called the poverty cycle, whereby a person gets ill, so loses money as they cannot work, meaning they can’t send their kid to school andz because of this is disadvantages and cannot find work easily if at all, gets ill and the cycle repeats. This cycle is a difficult one to get out with as often no matter how hard a person may try they are not told how to reduce the spread of illnesses so they may get one so are very likely to lose money because of that.
Therefore this suggests that without help the country will remain under developed as many individuals won’t be able to escape poverty themselves and therefore help the country to develop as a whole. Therefore other countries need to help those combat diseases but also importantly provide education about both the disease and for developing essential life skills so that people may get skilled jobs so that they can earn money and even if they get ill will be able to provide for their families with the money they could have saved.
Another way this could b done is through the donations of medicine although recently there have been reports of countries giving out-of-date medicines to African countries which could make the situation worse. It’s also important that this medicine gets to where it needs to be, the rural areas are the main areas but also shanty towns where diseases spread rapidly, like Shayelitsha in South Africa where 1. 8million people live. However forms of helping developed countries such as aid have not necessarily been proven to work.
There are large problems with donating drugs alone to countries as these cannot always reach the right people without individuals in the countries taking them there and even from that prevention can be as important as curing them. This would require training and long term efforts from large numbers of western developed countries, a hard task to achieve. Huge amounts of aid have been donated; in last 50 years alone over 2 trillion dollars in aids were donated to Africa.
There are debates to how much difference this has made to these countries but it is generally accepted that large amounts of the aid has made little or no difference. Although it’s well established that the number of people in extreme poverty, less than $1. 25 a day has reduced by 10% the rest of the world have 28% less in the same period. This suggests that as Africa has received a total of more than 42,000 million USD in 2012 alone that this is not affecting the population as much as it should.
This is because if this money was divided by the entire population of Africa every single person would receive nearly 40 USD; this would be enough to bring almost every single person out of poverty. Although of course much of this is being spent on education, sanitation and food supplies there is an obvious lack of affect form this aid, with this amount of money it seems unbelievable that there is only 10% reduction in extreme poverty and still large amounts of under development.
It’s therefore clear that there is a lack of results from this and it could be argued that with many problems in developed countries, i.e. lack of green energy, this money could be used to help in other ways within developed countries. However this is a weak argument as no rich country faces the same challenges that places like Kenya have where millions of people are starving and dying of lack of malnutrition. Therefore although aid is only having a slow affect with extra emphasis placed on helping development and removing poverty by the UN ,through there millennium development goals, it is still having an effect on Africa and the countries that receive this wealth.