1. Economic Disparity in the World

2. Key Terms  Economic disparity  Extreme poverty  Development assistance  Official development assistance (ODA)  Private development assistance (PDA)  Non-governmental organizations (NGO)  Bilateral aid  Multilateral aid  Canadian International Development Agency (CIDA)  Aid fatigue  Civil society  Gini index  Income redistribution

3. Key Questions  What is the nature of economic disparity in the world?  What can be done to reduce economic disparity? What should be done?  How successful has foreign aid been in helping to reduce economic disparity?  What role do remittances play in reducing economic disparity?  Why do issues related to remittances get relatively little attention?

4. The Nature of Economic Disparity  Simply put, this is the difference between the “haves” and the “have-nots.”  We can look at people, or countries.  Simple division also: If the total value of your assets is at least… You are in the world’s richest… US $2,16150% 3,51740% 6,31830% 14,16920% 61,04110% 150,1455% 514,5121%

5. The Nature of Economic Disparity  Economic Globalization has spread money, but not evenly.  Rich countries have gotten richer, poor countries hardly see any growth, or none at all.

6. Disparity Among Nations  The UN reports that per-capita incomes in 100 countries have fallen.  That represents 1.6 billion people.  In 2006, the 20 richest countries had per capita PPP GDP of more than $30,000 US.  The 60 poorest had per-capita PPP GDPs of less than $3,000 US.  The assets of the three wealthiest people in the world total the GDP of the poorest 47 nations.

7. Economic Disparity Among Nations  “A rising tide raises all boats” – Supporters of economic globalization.  “A rising tide drowns those who do not have boats” – Critics of economic globalization.

8. Extreme Poverty  Defined as living on less than $1 US a day.  47% of India lives on less than that, 40% lives on between 1 and 2 dollars a day.  Zambia is worse. 85% live on less than $1, a further 13% live on between $1 and $2.

9. Causes of Economic Disparity  There are a lot of reasons why the economic gap is growing.  Some countries only have one reason, others have a lot working together.

10. Causes of Economic Disparity  IMPACT OF COLONIALISM  Economic systems affected,  Cultural impacts have shaped some of these countries.

11. Causes of Economic Disparity  LACK OF INVESTMENT  For various reasons, there is hardly (or no) money in Periphery nations to invest in development.  Lack of taxes? (Internal revenue)  Lack of foreign investment? (external revenue)  This means economic growth happens very slowly

12. Causes of Economic Disparity  POPULATION GROWTH  What do we know about population growth?  Because of the faster growth in these areas compared to the economic growth, the standard of living for each person is worse each year. Africa N.AEuropeAsia

13. Causes of Economic Disparity  DISEASE  The more sick people a population has, the weaker the economy. Why?

14. Causes of Economic Disparity  FOREIGN DEBT  Poor countries get a lot of money in aid from Old Core, and New Core countries. Even some Near Core countries contribute aid.  A lot of that money comes from loans.  In 1977, the 60 poorest countries owed $550 billion.  By 2007, they had paid $540 billion in loan payments and still owed:

15. Causes of Economic Disparity  WAR  Poverty = War (a lot of the time).  Fought over scarcity of resources, ethnicity, government control, and money.

16. Causes of Economic Disparity  LEADERSHIP ISSUES  Lack of experienced leadership  Weak laws  Control of the military  Positions of opportunity.

17. Causes of Economic Disparity  TRADE INEQUITIES  Remember trade surpluses and deficits?  Most Periphery countries are prevented from competing with Core countries. -Tariffs -Regulations -Others.  If Periphery countries have trade deficits, they are spending more money on bringing in goods than they sell.

18. Causes of Economic Disparity  LACK OF LOCAL CONTROL  Periphery countries, very often, have little control over decisions.  MNCs and TNCs as well as multinational organizations (IMF, WB, UN) have a lot of say.

19. What can we do about it?  Colonialism?  Population growth?  Diseases?  Debt?  Lack of Control?

20. Development Assistance  Also called foreign aid.  Official Development Assistance (ODA) is from governments. Canada spent $5.4 billion in 2014 on foreign aid.$5.4 billion  Private Development Assistance (PDA) is from NGOs. They get some of their money from governments, but a lot comes from private donations.  Bilateral Aid is aid from one country to another.  Multilateral Aid is when a country gives money to an international organization.

21. Development Assistance  A second type of NGO are called foundations. Usually, these are created rich individuals to make a difference.

22. Development Assistance  A third type is when government donations go to NGOs.  Very often, governments match donations.

23. Why Do Countries Provide ODA?  What are some reasons that you think governments would donate to international causes?

24. Why Do Countries Provide ODA?  Religious and Humanitarian reasons.  - Some countries feel that because they have a lot of wealth, they should provide for those who need it.  - There are religious-based organizations that provide funds because their beliefs call for charity.

25. Why Do Countries Provide ODA?  Economic Reasons  -A lot of the time, government aid is NOT in money.  -They purchase food or equipment from companies within their country and send those. This has a dual benefit.

26. Why Do Countries Provide ODA?  Political Reasons  - Trying to create relationships with other countries  -Maybe trying to punish those countries.  “He may be a bastard, but he’s our bastard.”

27. Why Do Countries Provide ODA?  Historical Reasons  -Some countries hold “special relationship” with countries with historical ties.

28. ODA from The Marshall Plan to Today  After the Second World War, Europe was devastated.

29. ODA from The Marshall Plan to Today  In the 1950s, aid was successful.: -Incomes rose, -fertility and infant mortality rates fell -food prices fell.  This was helped by the Green Revolution  By the 1980s, aid dropped from government sources because people were starting to see a lack of improvement. Things were not changing.

30. Problems with International Aid  There are a few.  1. “Free flood fooods the market. -Demand for domestic food drops, -Prices go down, -Poverty happens.  2. Does not usually reach those who need it. -Food usually stays in the cities, not where people are.  3. Sometimes aid is sent that is not useful. -Some foods cannot be eaten by everybody for example.

31. What’s Next for Development Assistance?  Most people agree it is needed.  Most people also think it does not do much to help. Why? What concerns do they have?

32. What’s Next for Development Assistance?  A lot of the money is wasted.  The money only goes to the huge “aid industry.”  It is used politically…both the giver and the receiver.  Only the rich end up with the money in the countries that receive it.  All of these things contribute to aid fatigue. The feeling that people are tired of it, and less help is getting out there because of it.

33. What’s Next for Development Assistance?  There is an agreement in the international community that something must be done about international aid.  The 2005 Paris Declaration sets out ways to see how effective the aid being spent is.  Some say it does not go far enough.  The business world and civil society have been arguing about the best way to carry on with aid.  What do you think business leaders think about aid? What do you think members of civil society think?

34. Remittances  Remember these?  Canada gave $5.4 billion in aid in 2014. That same year, 17 billion dollars was sent out of the country as remittances.  This is unofficial aid. The money comes out of Canada’s economy, and goes towards improving the target country.

35. The Gini Index  The gini index is a measure of the wealth distribution in a country.  WHO HAS THE MONEY? Gini Index (Year of data) Old CoreCanada0.331998 Germany0.282000 Japan0.382002 U.S.0.452004 New CoreChile0.542003 China0.442002 Malaysia0.462002 Poland0.342002 Near CoreGeorgia0.382003 Iran0.431998 Nicaragua0.552002 Philippines0.462002 Far Periphery Bangladesh0.322000 Cameroon0.452001 Papua New Guinea 0.511996 Zambia0.531998