MODULE 8: REGIONAL CO-OPERATION, INTERNATIONAL aid on developing countries.

-discuss the roles of the specialised

TRADE & FOREIG AID
agencies of the United Nations

TOPIC GENERAL SPECIFIC OBJECTIVES

OBJECTIVES
Learners should be able Learners should be able to:
to:

Regional Co-operation Develop an -explain regional co-

understanding of the operation/integration;
nature of regional co- -identify and classify regional co-
operation and its impact operation as political, social and
on the development of economic;
Botswana and other -discuss and assess the role played by
Southern Africa. regional co-operation or communities
in the development of the Southern
African region;
-evaluate the successes and challenges
faced by such regional communities as
Southern African Customs Union
(SACU), Southern African
Development Community (SADC).
-Suggest ways of strengthening
regional co-operation in the Southern
African region.

International Trade Develop an -explain international trade;

understanding and -account for international trade;
appreciation of the - describe global trade patterns (a)
dynamics of developed countries, (b) developing
international trade. countries and (c) between developed
and developing countries ;
-discuss free trade and protectionism.
-discuss the challenges of international
trade.

Foreign Aid Understand the concept -explain the concept of foreign aid;
of foreign aid and its -describe the types and forms of
impact on development. foreign aid;
-account for foreign aid;
-evaluate the implications of foreign

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

 3. Common market: In addition to free trade in goods and services,
REGIONAL COOPERATION/ free movement of factors of production (labour and capital)
INTEGRATION between member states is allowed.

Regional cooperation is the coming together of countries with main aim of 4. Economic union: This organisation includes all features of a
addressing common needs. common market, and also requires members to adopt common
economic policies in such matters as agricultural, transport and
Regional co-operation is when countries in the same region come together taxation.
for several reasons such as, to promote prosperity, to maximise economic
growth, to establish financial stability in the region and expand regional (b)POLITICAL: Regional co-operation also serves as a mutual political
trade and development. forum to articulate the voice of the regional grouping.

Regional co-operation can thus be defined as coming together or grouping It has been common for regional groupings to promote such explicitly
of countries in the same geographical location to work unanimously to political stance such as peace, democracy, good governance and other
promote economic development, give each other political support and pertinent issues as they arise.
ensure security
ECONOMIC, POLITICAL AND SOCIAL DIMENSIONS OF (c)SOCIAL: Regional co-operation is also social in the sense that the
REGIONAL CO-OPERATION interaction of the people within a regional grouping takes place at social
level.
(a)ECONOMIC: The general aim of regional co-operation is to promote
more trade between its members, to generate a great amount and share of It is imperative to harmonise the economic pursuits and ideals with social
external trade and raise the standards of living of the population of the ramifications within a region.
member state.
Some of the forms of economic integration are: Thus the issue of cultural similarities and differences, language, and other
factors have to be taken on board and complement the economic goals.
1. Free trade area: No tariffs or quotas between member states,. The main motive for regional co-operation is economic, political support
Each member countries unilaterally impose tariffs on non-member and security.
states. Finding themselves in economic and military weak positions and also
politically insecure state, nations of the world have moved closer together
2. Customs Union: There should be free trade between member by forming collective bodies throughout the rest of the world.
states, but all members must operate a common external tariff on Examples of such bodies or regional organisations are:
imports from non-member states. Sometime money accumulated is  The African Union (AU)
shared among member states  Southern African Development Community (SADC)
 Southern African Customs Union (SACU)

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

 THE ADVANTAGES OF REGIONAL CO-OPERATION South Africa dominates SACU as it has control over the economy of other
members, and it seems to prevent manufacturing industries from being able
1. Countries often speak with one voice in international affairs. to develop in the other three members.
2. Greater efficiency is ensured in administering or planning for
larger rather than small units. SACU’s STRENGTHS INCLUDE:
3. There is easy movement of people and goods from member 1. Free flow of goods.
countries across borders. 2. Cheaper goods due to reduced tariffs or custom duties.
4. Countries establish a common market therefore benefit from 3. Easy movements of people, for example, skilled people move
specialisation. Each country produces according to its comparative between the countries
advantage, for example, producing what they can do best. 4. Expanded or large market area.
5. Several small countries come together to form a common market 5. Easy flow of capital or money for investment in member countries.
so as to enable large industries to operate without any losses.
6. They are able to attract new investors such as larger multi-national 2. SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
companies therefore prices could be brought down through (SADC)
competition.
7. Regional co-operation enables countries to run common services It was established in April 1980 as Southern African Development Co-
together, for example, railways, same central bank and currency ordination Conference (SADCC).
such as EURO. In August 1992 it was transformed for SADCC to SADC (Southern African
8. Countries are also able to solve conflicts or wars together and offer Development Community).
assistance to member states which are impoverished by wars. SADC has fourteen member states which are : Angola, Botswana, DRC,
Lesotho, Malawi, Mauritius, Madagascar, Mozambique, Namibia, South
FORMS OF REGIONAL CO-OPERATION Africa, Swaziland, Tanzania, Zambia, Zimbabwe.
Seychelles has been member of SADC until 2004 when she failed to pay
EXAMPLES OF REGIONAL CO-OPERATION her annual subscription and was thus dropped.
Some African countries like Rwanda who are outside the Southern African
1. SOUTHERN AFRICAN CUSTOMS UNION (SACU) region are interested in joining SADC. Rwanda has since submitted her
application for membership.
SACU was found in 1910. Its member countries are Botswana, Swaziland,
Lesotho and South Africa. The objectives of SADC are to:
It was formed to encourage free trade between member states. 1. Achieve regional development and economic growth.
Free trade means that little customs duty is charged on products imported 2. Alleviate poverty and enhance the standard and quality of life of
into member countries. people of Southern Africa.
Goods imported from outside these countries are charged custom duties and 3. Promote and defend peace and security.
the revenue is shared among the member countries. 4. Allow the exchange of trained workers and technology.
5. Build infrastructure together across borders.

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

 6. Get foreign Aid to pay for development. THE PROBLEMS /CHALLENGES FACED BY SADC COUNTRIES
7. Encourage trade among member countries.
8. Achieve sustainable utilization of natural resources and effective 1. Lack of common currency.
protection of the environment. 2. Lack of a common development strategy.
9. Evolve common political values, systems and institutions. 3. Diverse political paths.
4. Republic of South Africa dominance.
THE ACHIEVEMENTS OF SADC 5. Political instability.
A lot has been achieved in SADC since its inception in April 1980 in 6. Completion and overlap of production of goods and services, for
Lusaka, Zambia. Some of the achievements are: example, Beef produced by Botswana and Namibia, Diamonds
 It has demonstrated that regional cooperation is possible. produced by Botswana and DRC.
 It has inculcated a sense of regional belonging as well as a tradition 7. HIV/AIDS- SADC members have the highest infection percentage
of consultation among the people and governments of Southern world-wide. This is impacting negatively on the market and skilled
Africa. labour force within the region.
 A number of infrastructural projects have been undertaken such as 8. Debts: SADC members have large debts especially external debts,
rehabilitating roads, railway lines and harbours. some members are repaying International Monetary Fund (IMF)
 A variety of seeds have been discovered through research to carter and World Bank loans and are unable to settle such debts.
for various climatic conditions of the SADC region. 9. Insufficient funds to carry out some projects.
 A number of civil wars within the SADC have been ceased 10. An attempt to protect home industries has slowed down regional
through SADC. trade.
 Collective bargaining. 11. Persistent drought or recurrence of drought. This has threatened
food security and heightened the poverty level of some countries.
 Membership security.
12. Rapidly growing population thus making it difficult to provide for
 Improved energy supplies.
or even solve problems of unemployment or poverty.
 It aims at achieving at least 30% target of women in political and
13. Falling terms of trade.
decision making structures and countries are thriving to achieve
14. Loss of human resources: SADC countries are faced with the
this in their political circles.
movement of skills and brain drain that leaves member states
 SADC capital cities and major towns are linked by tarred roads.
vulnerable in essential sectors such as engineering and health.
 Since the region is prone to drought, member countries have
agreed to share water course systems.
 The member states share information on low cost energy
technologies.

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

THE WAYS BY WHICH REGIONAL COMMUNITIES SUCH AS
SOUTHERN AFRICA DEVELOPMENT COMMUNITY (SADC)
AND SOUTHERN AFRICAN CUSTOMS UNION (SACU) CAN BE
STRENGTHENED

- Fair or equal sharing of customs duty

- Poverty alleviation
- Improved infrastructures such as roads and telecommunications
networks
- Establishment of a common currency
- Adoption of one common official language
- Maintenance of peace and security
- Speedy sharing of custom duties for SACU
- Control of HIV and AIDS scourge
- Imposing sanctions on uncooperative member countries
- Establishment of a common passport
- Removing all trade barriers

THE WAYS BY WHICH MEMBERSHIP OF A REGIONAL

COMMUNITY MAY HELP A COUNTRY TO DEVELOP
ECONOMICALLY

- expanded markets/ access to the sea by landlocked countries

- Revenue from import duty/ from outside the region
- Infrastructural development such as tarred roads link capital cities
of member states and improved telecommunication networks
- Large scale economic ventures, for example, trans-fontier national
park between Botswana and the Republic of South Africa/ large
industries
- Increased production due to specialisation
- Technology transfer between member states
- Labour movement helping countries with less skilled labour
- Employment creation
- Availability of goods and services
- Aid from other members, for example, loans/ financial assistance

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

 THE IMPORTANCE OF INTERNATIONAL TRADE (REASONS
INTERNATIONAL TRADE FOR TRADE OR EXCHANGE)
1. A country can get goods and services that it is unable to produce.
International trade is the exchange of goods and services between
This means that a country gets access to goods and services it has
countries.
limitations of acquiring by its own human and physical resources.
It involves the physical movement of goods and services from one country
2. This creates good international relationship between countries.
to another.
3. It helps developing countries to gain access to international
THE ASPECTS OF INTERNATIONAL TRADE
markets for their primary products like cocoa, rubber, coffee,
cotton, diamonds, gold, oil etc.
4. It creates employment in industries where goods are produced,
since more people will be employed in order to produce more.
5. It generates income for countries involved in trade.
6. It is a source of foreign exchange which is used by countries to
import goods from other countries and to finance development
projects like the building of roads, schools, hospitals within the
countries.
7. There is international specialisation which speeds up production
thus leading to mass production which is bound to lead to lower
prices.
Countries concentrate their efforts in the production of particular
commodities therefore countries and individuals can develop
expertise in specific areas, train workers and find new methods of
production.
8. It provides countries with a wider variety of goods from which to
 Imports are goods or services a country buys from other countries choose to meet their basic needs and wants.
 Exports are goods or services a country sells to other countries 9. It enables goods to be obtained at different seasons, as various
 Inflows are sums of money or money that comes into the country, parts of the world experience different climatic conditions at
for example, payments of exports and foreign aid. different times of the year.
 Outflows are sums of money or money that leaves the country, for 10. It helps some countries to get rid of surplus by exporting it, for
example, payments of imports and tourists expenditure out of the example, if a country produces more than it can consume it then
country. export.
 Invisible trade is the buying or selling of services which are 11. A country may acquire technology and skills through international
intangible and unseen, for example, tourism and education trade.
 Visible is the buying or selling of tangible goods or goods that can 12. It enables developing countries to get technical assistance and
be seen/touched. knowledge from developed countries.

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

 THE DISADVANTAGES/ LIMITATIONS OF INTERNATIONAL TRADE POLICIES
TRADE
1. It benefits the richer countries than the poor. (a) FREE TRADE
2. It often makes it difficult for poorer countries to change their
pattern of trade, for example, they are constant consumers of cheap Free trade is the principle or practice of exchange of goods and services
raw materials and buyers of expensive finished goods. between countries in which controls or restrictions to trade have been
3. It may also lead to over production of goods which might lead to removed.
economic depression. Free trade is a system whereby firms and people may trade anywhere
4. It leads to interdependence therefore in times of war, when supply worldwide without being charged custom duties.
sources of essential goods halt or stop, the standard of living will
be low. THE CHARACTERISTICS OF FREE TRADE
5. It brings competition, international jealousy and mistrust.  Prices are determined by supply and demand.
 Trade may occur anywhere in the world without restrictions.
THE PATTERNS OF GLOBAL/ INTERNATIONAL TRADE  The economy has to be privatized.
International trade takes place at different levels and various patterns have  There is free competition.
emerged.
(a)Trade between developed countries THE ADVANTAGES OF FREE TRADE
The generally these countries trade products that both of them manufacture  World production is increased because countries are enabled to use
but which one of the countries produces at a lower price or higher quality. their resources in the best possible way.
(b)Trade between developing countries  Each country can enjoy a wider variety of goods and services
The main trade between developing countries is food. leading to higher standards of living.
The amount of trade between developing countries is generally much lower
 It promotes international competition which helps in keeping
than trade between developing and developed countries.
prices down.
There is less trade because developing countries usually produce the same
 Nations allow exports and imports free of custom duties (tax).
kind of raw materials as one another.
 The world is like one big market with prices determined by supply
Since they do not export many manufactured goods they have very little to
and demand.
trade with one another.
 Investment in resources can take place anywhere unrestricted.
(c)Trade between developed and developing nations
 People buy where they find the best deal.
The developed world largely exports manufactured products whereas the
developing world largely exports raw materials, resulting in the dominance
THE DISADVANTAGES OF FREE TRADE
of the world trade by developed nations.
 Free trade may increase world production but this often helps some
countries than others, that is those with a lot of resources will
benefit more.

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

  Easy access to resources will lead to exploitation of more TYPES OF PROTECTION
resources.
 Greater mobility of labour from area to area will leave other  TARRIFS (Import duty)
countries with few skilled human resources. These are taxes put on imports to increase their prices so that
imports are more expensive to buy.
(b) TRADE PROTECTIONISM This is done to discourage buyers from buying foreign goods and
at the same time protect local industries by promoting their
Trade protectionism is also known as restricted trade products.
It is a principle or practice of taking care of a country’s own industry by  QUOTAS
subsidizing them or imposing barriers against imports. This is a measure that limits the quantity of imports that can be
Protectionism is a system whereby trade policies are imposed to safeguard brought into a country by importers’ every year.
local industries from foreign competition by raising import duties or tariffs. This would limit the consumers’ choice of goods hence forcing
This is the opposite of free trade. them to buy locally produced goods and services.
The policies also restrict the free flow of goods and services across  EXCHANGE CONTROLS
international borders. International trade involves foreign currency exchange as exports
are paid in the local currency.
This means there is a certain foreign currency in the country that
flows due to payments of exports.
The government therefore limits the amount needed to pay for
exports.
In the process free-flow of goods and services is reduced.
 ECONOMIC NATIONALISM/ QUARANTINE SYSTEM
The government can decide to use health and safety regulations to
limit the type and quantity of imports.
For example, the government refuse to allow cattle from
Zimbabwe into Botswana because of the Foot and Mouth disease
that is prevalent there.
This leads to discrimination in favour of home products.
 POLITICAL BOUNDARIES
The boundaries generally regulate the easy flow of goods and
services into a country. Traders cross at certain points in order to
declare their goods at the border

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

 THE ADVANTAGES OF TRADE PROTECTIONISM BALANCE OF TRADE

1. It protects infant industries or new industries from competition. The balance of trade refers to the difference between the amount of money
2. Local industries are protected from competing with foreign goods leaving a country to pay for imports and the amount of money coming into
or industries. the country from other countries to pay for exports in a year.
3. It boosts the number of exports.
4. Countries charge tariffs or quotas to limit imports and at the same It is calculated by subtracting imports from exports to see if there is a trade
time raise revenue. surplus ( a positive balance) or a trade deficit ( a negative balance).
5. Government encourage exports by giving subsidies, Export-
Oriented Strategy. (a)Positive or Favourable balance of trade is when a country exports
6. Investment in other countries may be restricted or banned. more goods than importing them in money terms.
7. It keeps incomes and employment high. The more goods and For example:
services a country produces the higher the incomes and Exports -P5 billion
employment level. Imports-P4 billion
8. It makes a country to be self-reliant; enables a country to provide
for its basic needs. The surplus is P 1 billion
9. It prevents dumping of foreign goods which are usually of low
quality but at the same time their prices are below the local goods. Positive balance of trade is also called trade surplus.
10. It corrects an unfavourable balance of payment as strict exchange
controls and high tariffs reduce imports. It is favourable because it means that the country is building up a surplus of
11. It also helps reduce imported inflation. That if there is rise of foreign currency that it can use in the future.
goods in a country and another country buy such goods they have
imported that inflation or increase of prices. (b)Negative Balance of trade is when the country is spending more on
12. its imports than it earns for its exports.
THE DISADVANTAGES OF TRADE PROTECTIONISM
1. Lack of competition may lead to expensive products in the home Negative balance of trade is also known as trade deficit.
market.
2. Sometimes local industries develop slowly because there is no Government try to avoid going into a negative balance of trade by
foreign competition. restricting imports and encouraging exports.
This leads to waste of economic resources because money has been
invested into these industries in order to achieve economic
development.
3. Protectionism narrows the market since trade with other countries
becomes difficult due to restrictions imposed as trade is only with
those countries with few restrictions.

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

 SOLUTIONS TO NEGATIVE BALANCE OF TRADE

How can the government solve the problem of deficit?

1. Try by every possible means to increase exports through:

 Building more factories.
 Encouraging farmers to grow export crops.
 Search for new sources of minerals.
 Limit imports.

2. The government may also devalue the currency, for example, reduce the
value of the local currency so that exports become cheaper for other
countries to buy. This will also make imports more expensive and people
Fig.3 will reduce buying from outside so much.

3. The government can also adopt the Export Oriented and Import
THE WAYS BY WHICH COUNTRY X COULD CORRECT ITS
Substitution Industrialisation strategies.
NEGATIVE BALANCE OF TRADE

 Protectionism 4. The other solution is to borrow money from international organisation

 Import substitution industrialisation and from private banks, for example, World Bank, IMF etc. but this
 Export oriented industrialisation solution should be treated as a temporary measure as it simply postpones
the problem.
 Foreign investment
 Invitation of Multi-National Companies
*Devaluation of currency is the most common solution especially in
 Beneficiation/ value addition to raw material, for example, cutting
developing countries as this helps a country to sell more exports and buy
and polishing of diamonds
fewer imports.
 Foreign aid
Devaluation is often the hardest on the poorest people in the country who
 Devalue the currency suddenly find their wages can no longer buy very much for them.

If a country spends more on buying imports than it earns form selling

exports then it has a negative balance of trade and this can lead a country
into debts with serious consequences.

Most developing countries experience a negative balance of trade and

therefore have to borrow money from the World Bank to pay for imports.

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

 A deficit on combined currency and capital account can be paid in
TERMS OF TRADE several ways:
 By selling foreign investment
Terms of trade refers to the rate at which exports buy imports.  By exporting minerals
 By receiving a gift from another country.
If the terms of trade decline or fall the terms of trade is unfavourable but if
they rise they are favourable. Deflationary policy – This can involve the following:
 Reducing bank lending
In developing countries the terms of trade have declined simply because  Raising interest rates
they export primary products which are less profitable than manufactured  Increasing taxes
goods.
 Cutting government expenditure.

BALANCE OF PAYMENT The aim of this method is to cut down domestic demand and reduce
imports. When demand is low, prices tend to go down and exports are more
Balance of trade is an account or financial records of all transactions of a
attractive to foreign buyers.
country and the rest of the world per annum.

Balance of payment is made up of the following:

THE CHALLENGES OF INTERNATIONAL TRADE

(a)Balance of payment on current account – The current account shows

1. Economic conditions in developing countries
the present income and expenditure of a country with the rest of the world.
2. Access to world trade- Although world trade has increased
dramatically, the share of poor countries remains 5% in global
(b)Balance of payment on capital account- Capital movements that may
trade.
be made by private individuals or firms or government agencies also effect The majority of people in developing countries are poor and
the balance of payment.
developing countries have the majority of people in the world.
There are four reasons for capital movement from one country to another:
3. The legacy of neo-colonialism- Whereas some countries have freed
 For investment abroad or liberated themselves from neo-economic bondage through
 As loans industrialisation, the rest of the developing countries is still
 For safety dependent on the developed countries.
 As a gift from one country to another. 4. Globalisation
5. Political instability
(c)Balance of payment on the monetary movement account: This part of
balance of payments tells us how the balance on both current account and
capital account taken together is settled.

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

 FOREIGN AID For example, the United Nations, European Union, International
Foreign aid is the assistance or help given to some countries from other
Monetary Fund , World Bank and other individual richer countries
countries and other donor agencies.
give money and other resources to those organisations with the
understanding that it will be given out to deserving countries when
EXPLANATION OF TERMS
the need arises.

 Recipient country- a state which receives aid. Emergency aid is basically food, medical supplies or other materials that
 Donor country- a state which gives out aid. are given in times of natural disasters such as droughts and earth quakes.
 Donor agency- an organisation which gives out aid.
 Tied aid- is the help or assistance that comes with “strings FORMS OF FOREIGN AID
attached”. This means that the aid is given with certain instructions
about how it may be used. 1. Financial assistance: Foreign aid in the form of financial
TYPES OF AID assistance can be divided in two forms:

Basically there are two main types of aid: a) Soft loans are money to developing countries by developed
a) Official Aid is paid by taxpayers in donor countries and countries to help in development.
administered by governments in those countries.
b) Voluntary Aid is the money or assistance raised by independent This money is given on condition that developing countries should
organisations and private donations, for example, Oxfam and Red pay back within a given period of time. The time is usually very
Cross. reasonable, that is why money is called soft loan.

Types of Official Aid b) Grants are the money given to developing countries by developed
countries to help in development.
i. Bilateral aid is the assistance given directly from one country to
another. Unlike soft loans, the money is given free of charge and is not
refunded.
Generally it is the government to government and this is often tied,
that is there are strings attached. 2. Technical assistance or specialist services refers to the services
offered to developing countries by experts, skilled staff from other
For example, the USA might donate money directly to the countries or developed countries and international organisations
Botswana government help with development. like IMF, World Bank and United Nations.

ii. Multi-lateral aid is the assistance given to a country by This form of assistance is commonly known as technical and
international organisation. advisory services.

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

 Usually the salaries of the foreign specialist are paid by the MOTIVATION FOR AID
developed countries or international organisation that sent them.
This has been categorized into two broad areas:
3. Education and training is a form of foreign aid whereby
developed countries and donor agencies offer scholarships and  Donor oriented
sponsorship to students of developing countries to attend  Development oriented
universities abroad.
THE REASONS FOR GIVING FOREIGN AID
They also avail their teachers and instructors to come and teach in
developing countries , for example, the Peace Corps from the  Humanitarian reasons
USA.  For development of skills and technology
 Trade links
4. Gift of consumer goods is the form of foreign aid in which food  Economic gains
and other consumer goods are given as free gifts to developing  Creation of political satellites or strategic reasons
countries by developed countries and other donor agencies.  Creation of employment
 For infrastructure development
 For peace keeping
For example, Botswana gets food resources from USA during
emergencies. THE ADVANTAGES/ ARGUMENTS FOR AID

Food and Agricultural Organisation (FAO) offers food resources to a) The aid can help developing countries in need or emergency
developing countries which are faced with drought and poverty. assistance and help for long term development.
b) Foreign aid helps governments in developing countries to provide
5. Foreign direct investment refers to the establishment of factories, needed infrastructure, for example, roads, schools, water and
hotels and industries in some countries especially developing bridges.
countries by firms and corporations that originate from developed c) Where finance is lacking aid can assist in removing delays to
countries. development.
d) Foreign aid is a means of expressing care and concern for the
In some cases foreign direct investment takes the form of a joint fellow humans especially from the rich to the poor and can
venture with the government of the developing country and the improve human rights.
donor country. e) Foreign aid plays the role of redistributing resources which are
unevenly distributed throughout the world.
For example, in Botswana diamond mining industry is a joint f) Foreign aid helps establish links between countries and
venture between the government of Botswana and De Beers consequently enhance international understanding and world peace
Company hence Debswana. and students may be given grants to study overseas.

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

 viii. Foreign aid encourages waste especially grants. Recipient
countries are wasteful if they are given money without having to
g) Foreign aid encourages and facilitates mobility of labour to where pay back.
it is needed most and it also enhances technology transfer.
h) It promotes the concept of interdependence by allowing the rich to THE IMPLICATIONS OF FOREIGN AID ON DEVELOPING
help the poor. COUNTRIES
i) It encourages trade between countries by strengthening the
relationship between them.  Tied aid ensures developed countries ready market for their
j) Developed countries gain support from developing countries, they products.
give aid against other countries.  Foreign aid is used to put political and economic pressure on
k) It helps developed countries to protect their investments in poorer countries.
developing countries.  Foreign aid increases the recipient country’s external debts as
loans are repaid with interest.
THE DISADVANTAGES/ ARGUMENT AGAINST FOREIGN AID  In most cases foreign aid only goes to the rich and urban dwellers
i. The aid does create dependency syndrome making weaker in recipient countries rather than the real poor people.
countries depend more on stronger ones.  In some cases foreign aid encourages corruption amongst officials
ii. The aid on bilateral basis is often used by richer and powerful in donor and recipient countries.
countries to consolidate their mighty or strength.  Foreign aid also distorts local markets in developing countries.
iii. The aid often makes countries to divert their attention from trade to  Foreign countries do not encourage self-reliance of recipient
aid.
countries so it promotes neo-colonialism.
iv. Foreign aid reinforces master-servant relations in international
 Developing countries are often not given appropriate relevant
affairs and promotes superiority-inferiority attitudes.
technology.
v. Foreign aid strengthens world inequalities and endorses or supports
the economic, political and social mighty of richer countries over
poor ones.
vi. Sometimes aid is project aid that is given on condition that the
country receiving the aid should use it for a project chosen by the
donor.
Then the problem sometimes is that the project chosen by the
donor may not be important to the developing country receiving
the aid.
vii. Sometimes a developed country gives aid to a developing country
on condition that the developing country should buy certain
materials from them.

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

 THE SPECIALISED AGENCIES AND PROGRAMMES OF THE It helps countries that need technical advice on how to increase
UNITED NATIONS food production, to fight pests and animal diseases and how to
conserve the soil.

2. World Food Programme(WFP)

It was formed in 1963.

It specialised in providing food aid to the population caught up in

the natural and man-made disasters and wars.
Most of the resources are used for emergency relief.

Most of the food that it distributes is pledged in kind by donor

countries.
THE ROLE OF SPECIALISED AGENCIES AND PROGRAMMES
OF THE UNITED NATIONS 3. World Health Organisation (WHO)

1. Food and Agricultural Organisation It was formed in 1948 to provide worldwide guidance in the field
of health.
This is a UN specialised agency formed in 1945.
It cooperates with government in planning and management and
It aims at promoting rural development by improving agricultural evaluation of natural health programmes and promotes the
production and increased food security. development and transfer of appropriate health technology,
It provides support to states preparing for emergency food crisis, information and standards.
sometimes provides food relief in conjunction with World Food The governing body of WHO is the world health assembly that is
Programme and is often involved in effort to re-establish composed of all member states and meets every year.
production following floods, livestock disease outbreaks and other
disasters. It plays a key role for example in monitoring disease control
research.
This agency works to increase the output of farmlands, forests, and
fisheries as well as nutrition levels by collecting and passing The organisation strives to prevent the spread of diseases
information concerning nutrition, food and agriculture. internationally by giving guidance to countries on health problems
and control of diseases.

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8

 It fights an endless war against malaria, leprosy, typhus, polio, 7. International Labour Organisation (ILO)
HIV/AIDS, SARS, Ebola etc.
It investigates working conditions, wages, trade union rights and
4. UNITED NATIONS EDUCATION, SCIENTIFIC AND social security of workers in all parts of the world.
CULTURAL ORGANISATION (UNESCO)
It advices on international labour questions.
This organisation seeks to achieve universal literacy through
programmes of cultural and intellectual cooperation.

It encourages international cooperation in natural sciences,

education and social sciences.

It aims at extending educational opportunities for children and at

rising education levels among adults.

5. United Nations International Children Emergency Fund

(UNICEF)

It was formed in 1946, as a programme to meet the emergency

needs of children.

It helps in the relief of children. It specializes in the supply of

medicine, food and equipment for the children’s welfare service.

It expanded rapidly during the 1980s attracting considerable funds

with its high profile selective primary health care programme in
impoverished countries.

6. United Nations High Commissioner For Refugees (UNHCR)

Its function is to provide protection and assistance to refugees but

this has been extended to include some groups of returned refugees
and internally displaced people.

MASUNGA SENIOR SECONDARY SCHOOL DEVELOPMENT STUDIES MODULE 8