The Living World
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Managing Differences in Development

Due to uneven development, there is a significant development gap between the richest and poorest countries in the world. Citizens of High-Income Countries (HICs) have a significantly better quality of life than those living in Low-Income Countries (LICs), with higher life expectancy, better education and employment prospects.

Reducing the development gap, rather than allowing it to continue widening, could improve the quality of life for millions of people. Below are some strategies to help reduce this development gap.

Strategies

Investment

Countries and Transnational Corporations (TNCs) invest money in LICs, providing income and employment. This investment often leads to better infrastructure, such as the Internet and roads, which are important for further development.

Industrial Development

Industrial development brings employment, taxes, higher income and infrastructural investment, which can lead to a multiplier effect. This effect stimulates further economic growth and development within a country.

Fair Trade

Fair Trade involves paying producers a fair price for the goods they produce. This ensures that farmers in LICs are given better wages, helping them escape poverty and provide a better quality of life for themselves and their communities.

Free trade complements Fair Trade by removing taxes and tariffs for LICs, freeing up more money for these countries to reinvest in their economies.

Tourism

Tourism can bring massive injections of cash to a country. The investment from multinational businesses that comes with increased tourism, as well as the income to local businesses, provides great economic benefits. Tourism also offers employment opportunities for locals, which further boosts the economy.

Intermediate Technology

Intermediate Technology involves providing appropriate technology and equipment that is suitable for the conditions in LICs. Expensive, high-tech equipment may not always be appropriate, so smaller-scale, more suitable solutions can be more beneficial.

Debt Relief

Many LICs owe huge amounts of money to other countries and stand little chance of paying back these debts due to high interest rates. Cancelling these debts can remove a huge financial burden from LICs and free up money for investment in their economies.

  • For example, in 2006, the IMF cancelled debts for 19 countries.

Aid

Aid, given by multinational organisations or individual countries, can significantly benefit an LIC and its people. This money is typically designated for spending on projects that will directly benefit the population, such as healthcare, education and infrastructure.

Microfinance Loans

Microfinance loans are small loans provided at low interest. These loans are often directed towards start-up businesses in LICs that may struggle to secure traditional loans, providing them with an opportunity to grow and contribute to the economy.

Key Terms

TermDefinition
Development GapDifference in levels of development between countries.
HICs (High Income Countries)Countries with a Gross National Income (GNI) per capita above $12,735.
LICs (Low Income Countries) Countries with a Gross National Income (GNI) per capita below $1,045.
Multiplier EffectAn effect where a business is set up, providing workers with more income to spend. These workers then spend their income on other businesses, which can then hire more people, who can spend more, and so on.

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