Development: Aid & Trade

Sociology: AQA A Level, topic 8.3.1

Development in Relation to Aid & Trade

There are different strategies that can be used to help a country develop, including aid and trade.

Aid is the movement of resources from developed countries to developing countries. Aid can be given in the form of a grant or a loan.
A grant is aid that does not require repayment.
A loan, on the other hand, needs repaying.

Aid can come from governments, NGOs, charities and private individuals.
Modernisation theorists suggest that aid provides a necessary early boost to a country’s economy and, subsequently, its infrastructure.
Some aid is focused on specific health interventions, e.g. vaccination programmes from children. Smallpox is an example of a disease that has been largely wiped out due to targeted aid programmes.

Some argue that the high administration costs associated with larger organisations means that the actual money getting through to those in need is relatively small.
Dependency theory argues that aid from the UK and the USA usually relies on whether the political ideology of a country is in keeping with Western values and principles.

Modernisation theorists say that developing countries need to increase their share of world trade to be more competitive and, subsequently, develop.
They can do this by selling the natural resources they produce to generate an income.
They can also use their potential workforce as a ‘trade’; attracting TNCs with lower wage bills and fewer legislative constraints on their practice.
The money employees then earn is spent in the country, thereby providing a further boost to the economy.

One problem with developing a nation through trade is that western countries pay only a small amount for a developing nation’s ‘raw material’ (for example coffee).
They then refine it and increase the cost to the consumer, sometimes by over 100x. This means that the benefits are massively disproportionate.