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unit 4.2: how do places become interconnected? (flows) - Coggle Diagram
unit 4.2: how do places become interconnected? (flows)
legal trade flows: goods and services/ material flow
china is the largest manufacturer and exporter: china accounts for 28% of global output
illegal trade flows
narcotics
columbia, china, mexico, afghanistan
meth, cocaine, cannabis (weed)
from developing to developed countries
human trafficking
forced labour, sexual exploitation, debt bondage
originate from developing regions and the people go to developed regions
only 5% of victims are identified
counterfeit goods
value of counterfeit goods: about $500 billion
large percentage of counterfeit goods originate from china (80%)
country most affected is USA
capital flows
remittance: transfers of money across national boundaries by workers
pros
individual to individual; risk of corruption is small
source of foreign currency which is valuable to purchase goods and services
adds to the consumers' purchasing power
encourages entrepreneurship as it is a source of funding for business start ups
cons
brain drain in the economy as all the talented people go to other countries
over-reliance: shld there be recession, conflict or tension, remittance can be cut-off anytime
received in small amounts: does not boost social spending
development aid: funding from more well-off countries to less well-off countries
pros
Promotes access to education in developing countries
Ethiopia education enrolment rates doubled because of foreign aid, furthermore curriculum has improved as well.
Health is improved
In Haiti, due to development aid, there is better access to proper sanitation facilities. Foreign aid investments in improving the HIV/AIDS situation has caused a 45% fall in deaths due to HIV/AIDS
push countries to start their journey in improving their economy
If used correctly, development aid can be the catalyst for economic development in the nation, which will have a multiplier effect to cause growth in other areas like socio-cultural and rise in geo-political power/influence as well.
Example would be South Korea which was very poor after the Korean war, however with the help of development aid, the Korean economy has now grown to be in the top 20 economies in the world with various thriving industries particularly in the tech industry
cons
Loss of sovereignty
aid establishments may enter a nation and begin to dictate how decisions are made in the system or rather where the aid should be allocated
Canadian aid establishments in Afghanistan did not give the Afghans a say in the matter of development aid. This led to unnecessary help by insisting that they needed human rights training instead of catering to what they said they needed which were healthcare facilities.
corruption
As development aid is not like taxes which come from the people, there is no pressure for them to use it responsibly, therefore there may be temptation to use it for other purposes; like for self-profit
Jacob Zuma, former South African president, spend development aid funds to fund the building of his home and labelled this under security updates
Development aid reduces immediate suffering but is not a permanent solution to existing problems.
In Africa, development aid is used to purchase critical commodities like water and food, alleviating issues like water shortage and poverty temporarily, but not solving them. From 1970 to 2000, it showed that there was a fall in the growth of GDP per capita from 1.5% to 0.5%
Receiving countries become increasingly dependent in development aid and thus they cannot survived without it
Countries in Sub-Saharan Africa including but not limited to Ethiopia, Kenya and Zambia have relied on foreign aid programmes, especially those from the USA like Millennium Challenge Corporation (MCC) and the Africa Development Foundation (ADF) to stimulate their local economies
Loans: Debt relief
Heavily Indebted Poor countries initiative (HIPC)
pros
boost social spending
countries are now able to invest in their healthcare and education sector to improve the standard of living of their citizens
reduce debt service
Improve public debt management
as they learn how to manage debt better, this might ensure that they don't fall into debt again
free from loans: they are now able to expand their economies and develop without worrying about debt
cons
challenges in ensuring countries get full debt relief from their creditors,
challenges in meeting the criteria, especially in terms of preserving peace and stability, improving governance and delivery of basic services.
aspects of SAP might not benefit locals (e.g. Bolivia – privatisation of water supply).
the country loses autonomy to map its policies