Causes of Economic Disparity (student generated from readings) note.docx

Unit 3: The Growing Gap - Causes of Economic Disparity (from readings) Cause Description Supporting Image Impact of Colonialism The impact of colonialism in the present is that many countries are still in debt from the exploitation of European countries, and often have to rely on other countri...

Unit 3: The Growing Gap - Causes of Economic Disparity (from readings) Cause Description Supporting Image Impact of Colonialism The impact of colonialism in the present is that many countries are still in debt from the exploitation of European countries, and often have to rely on other countries for their economy because they need exports. Lack of Investment Lack of faith in countries leads to lack of investing Less wealthy countries need investment to get out of this loop of being poor Investing in countries that suffer from a poor economy has proven to be extremely beneficial (Japan post WWII) If wealthy countries shared their wealth and invested in poorer countries everyone could prosper Disease Healthcare industry helps the rich become richer/afford healthcare; poor health can also contribute to lower income GDP can play a part too with how disease grows the economy with the healthcare industry Life endangering diseases create large challenges, as parents could pass away, which is harder on those less developed areas Foreign Debt In 1977, 60 of the poorest countries owed $550 billion USD in debt they had accrued. $540 billion USD was paid in the next 30 years to settle these debts, however these countries still owed $523 billion USD to private lenders/foreign governments. They had to pay $13 USD in interest for every dollar that they owed. These debts left these already poor countries with the inability to invest in crucial economic development, healthcare, or education. Population Growth As population grows in less economically advanced countries, the standard of living stays low instead of maintaining a stable and manageable level of population Populations in these countries grow at a more rapid pace due to the lack of contraceptive methods (in addition to an increase in secularization) and proper healthcare War After WW2, the countries that were deemed to be in a “zone of peace” were able to economically grow and prosper without the threat of war. There were, however, countries that never could escape the combat, they were in a “zone of war.” Countries that stayed in a state of revolution didn’t have the time and money to develop economically because their governments’ focus was to stop the next revolution. Leadership Issues When leaders fail to support the needs of their country and only use their position for personal profit from leading the government. This also leads to conflicts between other governments with either similar governments or opposing governments. Trading Inequalities G8 Nations (France, Germany, Italy, Japan, UK, US and Canada) have used trade barriers such as tariffs to restrict the amount of imports from developing countries, despite the fact that these nations have frequently spoken out in favor of free trade. Trade and inequality and trade and income show substantial correlations between countries, however it is difficult to determine cause and effect because of endogeneity issues. Countries that have more open trade (exports plus imports as a percentage of GDP) have a have greater standard of living and less income disparity Tariffs placed on products such as cloth by G8 countries are 4x higher if the products are produced in Africa or the Middle East than if the products were produced in other G8 countries. G8 countries also subsidize agricultural products so that they can be cheaper than products from developing countries. Lack of Local Control People in developing countries have very little control over their own economic affairs. Dominican Republic is mostly used for western country vacation spots. The Dominican Republic is used to support other countries instead of their own.