Reducing the development gap

Question 1

Investment

Answer 1

• Foreign direct investment is when people or companies in one country buy property or invest in infrastructure in another
• FDI leads to better access to finance, technology and expertise

Question 2

Aid

Answer 2

• Money or resources are given to a country by a charity or foreign government
• The money is used for development projects e.g. constructing schools, building dams and wells and farming equipment
• Aid can help but sometimes its wasted by corrupt governments

Question 3

Fair trade

Answer 3

• Farmers in LICs getting a fair price for the goods they produce
• Companies who want to sell products labelled as fair trade have to pay producers a fair price
• But sometimes only a tiny proportion reach the producers while the rest boosts retailers profits

Question 4

Using international technology

Answer 4

• Intermediate technology including tools, machines and systems that improve quality of life but are also simple to use and affordable to buy
• E.g. solar powered LED bulbs which allow people to work later and conserves money

Question 5

Microfinance loans

Answer 5

• When small loans are given to people in LICs who ma not be able to get loans from banks
• This enables them to start their own businesses and become financially independent
• Although microfinance works for some people, it can also cause problems by encouraging people to get into debt

Question 6

Industrial development

Answer 6

• In counties with a very low level of development, agriculture makes up the economy
• Development industry boosts GNI and development as productivity increases

Question 7

Debt relief

Answer 7

• When some or all of a country’s debt is cancelled or interest rates are lowered meaning the country has more money to spend on development