Download Reasons for inequalities in development

Reasons for inequalities in development
As you have seen the world is divided by development. There are a number of reasons why
inequalities in development exist. Read the sheet below to understand these reasons.
Trade
In simple terms trade is the exchanging of one thing for another. This allows people to buy goods and
services that are not produced in their own countries (Imports). It also means they can sell goods that
are they produce (exports).
It must be noted that this exchange of goods has huge implications for the economy of a country.
For a country’s economy to be productive the value of exports must be greater than the value of
imports, this allows the country to have a trade surplus. If imports have a greater value than exports
then this will lead to a trade deficit.
Developing countries tend to have economies based on agriculture; therefore their exports are
predominantly primary goods. The value of primary goods is low. Which leaves a problem when their
imports are predominantly secondary goods, which have a higher value.
Trade is complicated by the fact that countries in the developed world will often put up trade barriers
to prevent other countries from selling their goods. These barriers come in the form of tariffs and
quotas.
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Tariffs add a charge to the goods being sold
Quotas limit the amount that can be imported
On top of all this developed governments can subsidise agriculture in their own country so that they
can provide goods at a lower cost than they could with out subsidies. An example of this is that
American rice in Ghana is cheaper than the rice grown in Ghana. This provides competition to those
developing nations that produce the same goods.
Population growth
Population growth can have an impact on the level of development within a country. If a developing
nation has a rapid increase in its population such as those seen in Ethiopia, then the country’s
economy cannot keep up with this population growth. It cannot provide jobs, housing or medical
facilities for the population. This can lead to a case where the pressures on the country are increased.
Population growth can affect development in a developing country because of unique circumstances
affecting today’s developing nations. These include trade imbalances, political problems and the
physical factors of a country.
Political Turmoil
in any country attempting to develop then capital investment needs to be made in to that country.
This is to provide better infrastructure for its industries, to create a skilled labour force and healthy
population. In a country with political turmoil you may have civil unrest with conflict between parties,
money may often not be invested in to the required projects and priorities.
One problem that can often be seen is corrupt governments that may embezzle money. I.e.
Zimbabwe
Industrialisation
Industrialisation is the movement of a country from a predominantly agricultural (pre-industrial) society
where capital accumulation is low, to an industrial society where capital accumulation is high. This is
due to the difference in value of primary and secondary products. This movement involves both social
and economic changes.
A move to an industrial society will have huge impacts upon the economy of a country. The amount of
money available to reinvest in to a country will increase, this will further develop the country. With
industrialisation comes an improvement of the country’s infrastructure. This along with a productive and
healthy workforce can bring in foreign investment in the form of Multi National Companies (MNCs).
MNCs are large international companies that have sections of their company in different countries
through out the world. In general the financial departments and the headquarters of the company will
be located in the developed world. The factories and production outlets will often be found in LEDCs.
The reason for this is that labour, raw materials and controls are lower in these countries.
MNCs account for 70% of total foreign trade; this includes operations in mining, manufacturing, finance
and communication services. These companies have increased economic growth and employment
within the LEDCs. Multi National Corporations can also cause problems because they provide such a
boost to an economy the threat of them leaving is concerning for the country. This means that they
have a huge influence on the government of that country.
Physical factors
Each country is individual but a number of physical factors can restrict the development of a country.
If a country is prone to drought this can lead to famine. It also makes it difficult to have a reliable source
of agricultural income, if your crop fails and you are dependent on agricultural goods for both your
income and your food source then difficulties arise.
The resources such as minerals, coal, gold, oil etc can have implications for your development,
countries who have a large number of natural resources can use these to further their development.,
however not all countries have access to natural resources. Which leads to an equal balance in
development.