The Development Gap

1
The Development Gap

• Why does it exist?

2
Causes of the Development Gap - Economic

• Trade
• Level of Savings
• Fiscal Trap and Debt

3
Causes of the Development Gap - Other

• Political Corruption
• Environmental - Physical Environment
• Social - Demographic Trap

4
Trade

• Some countries benefit more from free trade than
  others.
• Dependency Theory Development of MEDCs promotes
  the underdevelopment of LEDCs and LLEDCs
• This is because the value of most goods, products
  and services are added in MEDCs means less
  wealth in developing countries
• Seen with production of cocoa in Ghana and the
  Ivory Coast - farmers only received 40-50 of
  the market value of unprocessed cocoa beans, a
  tiny amount compared to the final price sold for
  in MEDCs
• MEDCs can also use their financial power to
  negatively influence trade in developing
  countries. For example, US cotton subsidies keep
  the global price 6-14 lower, without this, West
  African farmers would earn additional income
  enough to cover the healthcare costs of 6-10
  people for a year

5
Level of Savings

• Can have significant impact on potential for
  sustained economic growth
• Those in poverty cannot save as they need income
  to sustain life (subsistence)
• World Bank figures show that those in the least
  developed countries only save 10 of their
  income compared to 25 in the most developed
  countries.

6
Fiscal Trap (Debt)

• Governments can lack finance to pay for
  improvements in services and infrastructure due
  to need to repay debt.
• In Malawi 9.6 of countries GDP goes towards
  repaying debt compared to 4.6 on healthcare.
• This discourages FDI which further prevents
  economic growth. Furthermore, SAPs emplaced by
  the IMF to counter debt can tend to negatively
  impact other areas leading some to claim that
  they harm more than help

7
Politics

• Government can fail to invest in infrastructure
  or allows corruption to rise to levels that
  impair economic activity.
• Zimbabwe political corruption left the economy in
  deep crisis with rapid inflation
  deindustrialisation and shortages of fuel and
  food. This has led life expectancy to fall from
  60 in 1990 to 39 in 2008.

8
Demographic Trap

• High fertility and rapid population growth can
  put a strain on infrastructure and services. This
  often occurs in areas of high levels of poverty
  due to high infant mortality, lack of state
  welfare and low levels of education.
• Bangladesh 3 Million added to the population each
  year which has put great strain on the resources
  and of the economy to meet the need of the rising
  number of people, 50 below poverty line.

9
Physical Environment

• Can pose specific problems to people and act as
  catalysts to other factors which generate
  poverty.
• Climate change offers serious threat to
  developing countries are less able to respond
  such as Bangladesh where climate change is
  predicted to have devastating impact on crops
  with yields falling by up to 30 . Serious threat
  to peoples livelihoods and food security
• Sudan severe drought has put pressure on
  peoples ability to subsist and survive

10
In conclusion

• Combination of factors, yet those relating to
  economics hold more importance.
• This is because it is economics that impacts upon
  all aspects of development it is needed to
  ensure good social development i.e. in healthcare
  and education
• Also, the non-economic factors tend to see
  importance in their ability to impact upon
  economics i.e. issues in the physical environment
  or with demographics limit successful economic
  growth