Chapter-52-Relationship-between-countries-at-different-levels-of-development-đã-nén.pdf

Chapter 52
Relationship between countries at
different levels of development

Low-income and middle-income countries that need to borrow often
find it relatively expensive to do so. A number of countries have requested
aid from other countries, often called foreign aid. Aid can take a number
of forms. It may be as a grant, a loan at a reduced interest rate, technical
assistance, or direct provision of goods and services.
Aid can be tied or untied, bilateral or multilateral. Tied aid is aid that
comes with conditions. For example, a grant may be given provided that
it is spent on buying products from the donor country. Untied aid is aid
given without conditions. Bilateral aid is aid given by one country to
another country. In contrast, multilateral aid is aid given by countries to
international organizations such as the World Bank or United Nations (UN)
agency, which then distributes it to other countries.
52.1 International aid

Reasons for giving aid
It might be expected that most aid would go to the poorest countries but this
is not always the case, as Table 52.1 shows.
This difference in the countries that would be expected to receive the most aid
and those that actually do reflects the different reasons for giving aid. Tied,
bilateral aid may be given to promote the industries of the donor country. A
government may seek to increase the growth of an infant industry by
requiring the recipient country that receives the aid to spend on products
from its country. For instance, the donor government may provide money for
the recipient to buy tractors. The donor government may insist that the
recipient imports tractors from firms in the donor’s country, even if cheaper or
better-quality tractors are available from firms in other countries.

Tied aid directly increases demand for the donor country’s exports, but untied
aid may also be given in the hope of increasing the donor country’s exports. If
aid does promote economic growth in the recipient country, it is likely to result
in the recipient country buying more imports. The recipient country may be
more inclined to buy from the donor country’s industries if good relationships
have built up as a result of the aid giving.
A motive behind some bilateral aid is to gain political influence. A recipient
government may feel obliged to support the donor government in its disputes
with another country or countries. For instance, a donor government may be
imposing trade restrictions on another country and may put pressure on the
recipient country to do the same.

Both bilateral and multilateral aid may be given to influence the economic
policies of the recipient government. For example, a government may give aid
to another country on condition that it ends the use of child labour or that it
reduces its budget deficit.
Both bilateral and multilateral aid can be given for humanitarian motives, that
is out of a desire to do good. This may be the case with crisis aid, that is aid
given to save lives during natural disasters and famines. Governments and
international organisations can also recognise that the development of other
countries can increase global GDP and international trade and reduce the risk
of negative external shocks.

SUMMARY
🌍52.1. International Aid
Low- and middle-income countries often struggle
with high borrowing costs, leading them to seek
foreign aid in different forms:
📜Forms of Aid
💰Grants: Free financial support (no repayment).
🏦Concessional Loans: Loans with low-interest
rates.
🛠️Technical Assistance: Knowledge, training, or
expertise.
📦Direct Provision: Goods & services instead of
money.
🔗Types of Aid
🤝Bilateral Aid: From one country to another.
🏛️Multilateral Aid: From multiple countries via
international organizations (e.g., World Bank,
UN).
📝Tied Aid: Comes with conditions (e.g., recipient
must buy donor’s goods).
🔓Untied Aid: No spending restrictions.
🎯Reasons for Giving Aid
🛠️Economic Interests
1.
Tied aid boosts donor’s industries (e.g.,
tractors must be bought from the donor
country).
Untied aid builds good relationships →
future trade opportunities.
🌐Political Influence
2.
Recipient may support donor’s policies (e.g.,
trade restrictions).
📈Policy Influence
3.
Aid may be conditional on economic
reforms (e.g., stopping child labor, reducing
budget deficit).
❤️Humanitarian Motives
4.
Crisis aid for natural disasters, famines,
emergencies.
Supporting development reduces global
risks and boosts international trade.

The effects and importance of aid
Aid can help the recipient country to experience increases in
its income per head and development. Aid can provide the
investment, or the finance, for education, healthcare and
new industries that the recipient country may be lacking.
Investment may not be easy for some low-income and
middle-income countries to achieve. This may be because
of the lack of savings and the lack of financial institutions to
channel those savings that do exist from lenders to
entrepreneurs wanting to establish new firms and to expand
the output of existing firms. There may also be a shortage of
entrepreneurs.
However, if investment can be encouraged, a virtuous cycle
may be created as shown in Figure 52.3.

The effects and importance of aid
A number of countries rely heavily on aid. For example, in 2019, 40% of Burundi’s
income came from aid. Heavy reliance on aid can have a number of disadvantages.
Some forms of aid can result in countries becoming increasingly indebted. In some
cases, low- and middle income countries transfer more money to high-income
countries in terms of interest on past loans (even if given on favourable terms) than
they are currently receiving in aid. Advice given and policies suggested or imposed
on low- and middle-income economies by international organisations, such as the
International Monetary Fund (IMF) and the World Bank, are not always suitable given
the conditions in the low and middle-income countries. For example, it may not be
the best advice to recommend an economy use capital intensive methods when it
has a shortage of capital but lots of labour. In addition, requiring a government to cut
spending on primary education to cut a budget deficit may harm an economy’s
development and longer-term economic growth prospects.

SUMMARY
🌍Effects & Importance of Aid
Aid can boost economic development by increasing
income per head and providing funding for key
investments in:
📚Education
🏥Healthcare
🏗️Infrastructure & Industry
💰The Role of Investment in Growth
🚀Aid can help overcome investment barriers in
low- and middle-income countries:
💵Lack of savings: Many countries lack financial
resources for large-scale investment.
🏦Weak financial institutions: Few banks to
channel savings into productive investments.
👨‍💼Shortage of entrepreneurs: Fewer businesses
to drive economic growth.
✅Encouraging investment → Virtuous Cycle of
Growth
Investment 🔄More jobs & income 🔄Higher savings
🔄More investment 🔄Economic growth
⚠️ The Risks & Downsides of Aid
1️⃣💸Over-Reliance on Aid
Some countries depend too much on aid (e.g., Burundi
– 40% of income from aid in 2019).
This can create economic vulnerability if aid is
reduced or stopped.
2️⃣📉Debt Problems
Some forms of aid = debt traps → Countries may pay
more in interest than they receive in aid.
Even low-interest loans can lead to financial burdens
over time.
3️⃣📊Unsuitable Economic Policies
International organizations (IMF, World Bank)
sometimes impose policies that don’t fit local
conditions:
❌Recommending capital-intensive methods when
labor is abundant.
❌Cutting primary education budgets to reduce
deficits → Harming long-term growth.
⚖️Key Takeaway:
While aid can be crucial for development, countries must
balance it with self-sufficiency, sustainable investment,
and effective policy choices.

International trade can be dominated by high-income
countries. The terms of trade are more likely to benefit high-
income countries since they can exercise more power in
trade negotiations. As a result, low-income countries and
some middle-income countries are often forced to
concentrate on primary products.
52.2 Trade and
investment

Trade
52.2 Trade and investment
The governments of low-income countries and some middle-income countries
often argue for trade rather than aid. What they are actually arguing for is trade on
fair terms. There are several reasons why international trade can act as an engine
for growth. It can improve supply conditions and can reduce costs, which can lead
to more efficient production as:
economies of scale become possible because of the larger market
the increased competition encourages domestic entrepreneurs to innovate and
look for new techniques of production
trade leads to a transfer of skills and technology from high-income to low- and
middle-income economies
specialisation and trade increases incomes and so provides the increased
savings which can be used for investment.
Trade may also stimulate demand. The expansion of production to cater for the
export market may increase employment. The result will be an expansion of
spending power in the home market that will create demand for domestic output.

Trade
Low-income countries have tended to specialise in primary products. Those
low-income and middle-income countries that have specialised in
agricultural products have been at a disadvantage in trading relations since
the prices of agricultural products have declined relative to the prices of
manufactured goods and services over time. This is for three main reasons:
The income elasticity of demand for primary products is low so that, as
world incomes have risen, there has been little extra demand for
agricultural products and demand has shifted to manufactured goods
and services.
Producers of manufactured goods in high-income economies have an
element of monopoly power, which they have used to maintain high
prices.
Subsidies provided to farmers in the USA and Europe put downward
pressure on global agricultural prices. For instance, it is claimed that US
subsidies given to its cotton farmers have deflated the global price and
have given US cotton farmers an unfair competitive advantage.

Trade
As trading patterns have been seen by some governments as exploitative, a
number of countries, such as Venezuela, have adopted import substitution
policies and attempted to diversify their economies. They have tried to
prevent imports of manufactured goods from high income economies in
order to develop their own manufacturing industries. Others, such as the
Philippines, have gone for export-led growth. Generally, the secondary sector
is becoming more important in low- and middle-income economies and
some are gaining comparative advantage in industries formerly dominated
by high-income economies.

SUMMARY
International trade is often dominated by high-income countries 🏦. Low-
and middle-income countries tend to specialize in primary products 🌾,
which puts them at a disadvantage.
📦Trade as an Engine for Growth
Many governments of low- and middle-income countries argue for fair
trade over aid ⚖️.
✅Trade can boost economic growth through:
1️⃣📉Lower Costs & Higher Efficiency
📈Economies of Scale → Larger markets = lower unit costs.
💡Innovation & Competition → Entrepreneurs develop new
techniques.
📡Technology Transfer → Skills & knowledge flow from rich to poor
countries.
⚙️Specialization → Higher income & savings → More investment.
2️⃣📊Increased Demand & Employment
Export growth 🚢→ More jobs 👷→ Higher incomes 💰→ Domestic
demand rises 📈.
⚠️ Challenges for Low-Income Countries
🌾Dependence on Primary Products
Many low-income countries specialize in agricultural exports, facing
disadvantages:
📉Falling Prices of Agricultural Goods → Demand shifts to
manufactured goods/services.
1.
🏭Monopoly Power of High-Income Countries → They control prices
for manufactured products.
2.
🚜Farming Subsidies in Rich Countries → Artificially lower global
prices (e.g., US cotton subsidies reduce prices, making it harder for
developing countries to compete).
3.
🌍Responses to Unfair Trade
🔄1. Import Substitution (Protectionism) 🛑🚢
Goal: Reduce reliance on imports → Develop
domestic industries 🏭.
Example: Venezuela blocked manufactured
imports to grow local production.
📈2. Export-Led Growth 🚀🌎
Goal: Expand exports to drive industrialization.
Example: Philippines focuses on selling
manufactured goods abroad.
⚖️3. Diversification & Industrial Growth ⚙️📊
Many low- and middle-income countries are
expanding secondary industries.
Some countries now have a comparative
advantage in industries once dominated by high-
income nations.
🔎Key Takeaway:
Fair trade policies and economic diversification are
key to breaking dependence on primary exports and
achieving sustained economic growth.

Investment
Investment flows between countries in search of profits, interest, and
dividends. Many low-income and middle-income countries have a deficit on
the current account of their balance of payments. This requires a surplus on
the financial account to cover it and is a reason why the governments of low-
income and middle-income countries often seek to attract direct and
portfolio investment from other countries.
Much investment initially went between high-income countries. More recently,
there has been an increase in investment in and from what are sometimes
referred to as emerging economies. These are economies that have high
rates of economic growth and are expected to have high rates of return while,
in some cases, carrying a greater risk than investment in high-income
countries.

Investment
In 2001, Jim O’Neill, an analyst working at an investment bank, labelled four
countries, Brazil, Russia, India, and China as the BRICs. He identified these
countries as the ones with the greatest potential for economic growth and the
ones providing the best opportunities for investment. The governments of the
four countries now meet regularly. In 2010, they were joined by the government
of South Africa, so now the term used is BRICS and it covers Brazil, Russia, India,
China, and South Africa.
The BRICS, particularly China and India, are important investors in other
countries. For example, state-owned Chinese firms have invested in
infrastructure projects in Africa and Indian firms have invested in a range of
European countries.

SUMMARY
📈Investment & International Flows
Investment moves between countries seeking profits,
interest, and dividends 💰.
Many low- and middle-income countries have current
account deficits 📉and need financial account
surpluses to balance them.
✅To attract foreign investment, governments seek:
🏭Direct Investment → Foreign firms set up
businesses (factories, infrastructure, etc.).
📊Portfolio Investment → Foreign investors buy
shares & bonds.
🌎Global Investment Trends
1️⃣💰Traditional Investment Flows
Historically, investment moved between high-
income countries 🏦.
Recently, more investment flows into and from
emerging economies 🚀.
2️⃣🌍The Rise of Emerging Markets
Countries with high growth rates & high investment
returns 📈.
Higher risks compared to high-income countries ⚠️.
🏆BRICS & Global Investment
🔹In 2001, Jim O’Neill (investment analyst)
identified BRIC countries:
🇧🇷Brazil
🇷🇺Russia
🇮🇳India
🇨🇳China
🔹In 2010, 🇿🇦South Africa joined → BRICS
BRICS nations meet regularly to discuss
economic cooperation 🤝.
They are major global investors → particularly
China & India.
✅Examples of BRICS Investment:
🇨🇳China → Invests in African infrastructure 🏗️.
🇮🇳India → Invests in European businesses 🏢.
🔎Key Takeaway:
Investment is crucial for economic growth 🌱, and
emerging economies (like BRICS) play an
increasing role in global finance 🌍💰.

52.3 The role of multinational companies
As mentioned above, one way that low- and middle-income
countries can achieve a rise in investment is to attract
multinational companies. A multinational company (MNC) is
defined as a firm that operates in more than one country. An
MNC is a business with a parent company based in one
country but with production or service operations in at least
one other country. The largest MNCs are global operations,
with manufacturing and retail outlets in many countries of
the world. Examples of the largest MNCs include Apple,
Huawei, Samsung, Tata, Toyota and Unilever.

The activities of MNCs on the economies of the host countries have
been the subject of much debate and discussion by economists and
politicians. MNCs can bring in new technology, new ideas, can add to
GDP and exports and may generate employment. In the Caribbean
area, for example, the impact of foreign direct investment (FDI) from
MNCs has been substantial. It has been particularly significant in the
bauxite, alumina, petroleum and natural gas industries. There has
also been considerable FDI in sugar, tourism and utilities. US MNCs
especially have been investors in these businesses. Recent decades
have seen the growth of MNCs from a greater range of countries,
particularly China and India.

Not all MNCs are well-liked in the countries where they invest, for a number
of reasons. MNCs may not create higher employment and higher incomes
if they replace domestic firms, they may deplete non renewable resources
and may create pollution. They may also send most of their profits back to
their home countries and may employ foreign rather than home labour,
especially in the top-paid jobs. Some of the products they sell may not
improve people’s living standards. In addition, MNCs put pressure on
governments to pursue policies that are beneficial to them but not the
economies in which they are producing. Their mobility and considerable
economic powers mean that they often negotiate favourable tax breaks
and exemption from some environmental laws. A number also develop
monopsony power and use this power to drive down the price they pay to
the host countries’ suppliers of raw materials.

Foreign direct investment
Through their activities, MNCs provide FDI to the countries in which they
operate. This is investment that is necessary to produce a good or service in a
foreign country. FDI, therefore, involves capital flows between countries.
Low-income and some middle-income countries lack savings to finance
investment. Foreign direct investment can overcome this shortfall; MNCs can
purchase capital equipment and help to develop the country’s infrastructure.
Some countries attract large inward flows of FDI. These tend to be countries
that are expected to grow rapidly and so provide large markets for the MNCs’
products or ones with low costs of production or abundant supply of raw
materials.
There is a range of measures that governments take to attract FDI. These
include low corporation tax, a good education system, few rules and
regulations for firms, and government subsidies.

SUMMARY
🏢Multinational Companies (MNCs) & Their Role
A multinational company (MNC) is a business that operates in multiple
countries 🌍.
It has a parent company in one country and production/service
operations in others.
🔹Examples of Major MNCs:
📱Apple, Huawei, Samsung
🚗Tata, Toyota
🛒Unilever
✅MNCs Contribute to Host Economies By:
1️⃣🔬Bringing in New Technology & Ideas
2️⃣📈Boosting GDP & Exports
3️⃣👷Creating Jobs (though not always for locals)
4️⃣🌍Increasing Foreign Direct Investment (FDI)
📍Example:
In Caribbean countries, MNCs invested heavily in bauxite, petroleum,
tourism, and utilities.
China & India have also become major global investors.
⚠️ Challenges & Criticism of MNCs
Not all MNCs benefit host countries equally, and they face criticism for:
🚫1. Replacing Domestic Firms → Leads to job losses for locals.
🌱2. Depleting Non-Renewable Resources → Environmental damage 🌍.
💰3. Repatriating Profits → MNCs send profits back to their home country.
👥4. Hiring Foreign Workers → Top-paid jobs may not go to locals.
📉5. Pressuring Governments → Demand tax breaks & fewer regulations
🏛️.
⚖️6. Monopsony Power → MNCs force suppliers to lower prices 📉.
🌎Foreign Direct Investment (FDI) & MNCs
MNCs bring in FDI, which is investment in production in a
foreign country 💵.
✅FDI is crucial for low- & middle-income countries
because:
They lack domestic savings 💰.
MNCs fund capital investment 🏭& improve
infrastructure 🛣️.
🌍Countries Attracting High FDI:
Those with rapid growth potential 📈.
Those with low production costs 🏗️.
Those with abundant natural resources ⛏️.
🏛️How Governments Attract FDI:
🏦Low corporate taxes
🎓Strong education system
⚖️Fewer regulations
💰Government subsidies
🔎Key Takeaway:
MNCs drive economic growth 🚀but can also exploit
resources & economies. Governments must balance
attracting FDI with protecting local interests 🏛️⚖️.

52.4 The causes and consequences of external debt
External debt includes loans which have not been repaid and interest payments on loans which
have not been made to foreign banks, foreign governments and international organisations.
More than 40% of low-income countries are heavily indebted to other countries and international
organisations. There are four main reasons why countries get into debt.
One is that the country has a structural current account deficit. Even in good times, the country
may spend more on imports than it earns from its exports or may have net outflow of primary
and secondary income.
A second reason is that the country may have been overconfident in the value of loans it could
repay.
A third, connected reason is that good use is not made of the funds borrowed. A government
may, for instance, estimate that investing the loan in building up a new industry may give a
return of 8% while the interest on the loan is 5%. If it has miscalculated, and the return is 3%, the
government will have problems making the interest payments.
The fourth reason can cause a significant rise in external debt: unexpected events can occur.
For instance, there could be an unforeseen depreciation of the exchange rate. This would be
likely to increase debt repayments as interest is usually paid in dollars. There may also be
negative demand and supply-side shocks. For example, there may be a global recession
reducing demand for the country’s exports or a natural disaster reducing the supply of its
exports and creating a need for greater assistance.

52.4 The causes and consequences
of external debt
External debt can be a major obstacle to future economic development. As
mentioned earlier, repaying the debt can divert funds away from improving the
welfare of the population and increasing the economy's growth potential.
A high level of external debt can make it difficult and expensive for low-income
and middle-income countries to attract more funds for development. A country's
credit rating may be reduced, resulting in the country being charged a higher
interest rate.
Some governments reduce their ability to borrow more in the future by defaulting
(refusing to pay) on past loans. These governments may consider that, for
instance, avoiding cutting spending on education and healthcare may be more
important than meeting their obligations to repay loans.

SUMMARY
🌍External Debt: Causes & Consequences (52.4)
📌What is External Debt?
💰External debt includes:
1️⃣Unpaid loans 📉
2️⃣Interest payments on loans owed to:
Foreign banks 🏦
Foreign governments 🏛️
International organisations 🌎(e.g., IMF, World Bank)
🔹Fact: 40%+ of low-income countries are heavily indebted.
⚠️ Causes of External Debt
1️⃣📉Structural Current Account Deficit
Imports > Exports = Always in debt.
Outflow of income (e.g., paying foreign investors).
2️⃣💰Overconfidence in Borrowing
Countries overestimate their ability to repay.
3️⃣🏗️Poor Use of Borrowed Funds
Wrong investment choices 📉
Example: Govt. expects 8% return, but actual return is 3%, while
loan interest is 5% → Debt problem.
4️⃣🌪️Unexpected Events
💸Currency depreciation → Higher debt repayments (as most
loans are in US dollars 💵).
📉Global recessions → Lower export revenue.
🌊Natural disasters → Need for emergency borrowing.
🔻Consequences of External Debt
🚧1. Obstacle to Economic Development
Repayments → Less money for education,
healthcare, infrastructure 🏥📚🏗️.
Slow growth 📉.
📉2. Higher Borrowing Costs
Lower credit rating → Higher interest rates
💸.
Harder to attract investment 🏦.
❌3. Defaulting on Debt
Some governments refuse to repay to avoid
cutting social spending 🏥📚.
But future borrowing becomes harder ❗.
🔎Key Takeaway:
External debt traps economies in financial
struggles if not managed wisely 💰⚖️. Good
economic policies and responsible borrowing are
crucial for long-term stability 🌍📈.

52.5 The role of the International
Monetary Fund and the World Bank
The International Monetary
Fund (IMF) and the World
Bank are two of the best
known and most influential
international organisations.

52.5 The role of the International Monetary Fund
and the World Bank
The International Monetary Fund
The International Monetary Fund (IMF) was set up in 1944 to help promote
the health of the world economy. The IMF’s headquarters are in Washington,
DC. In 2019, the IMF had 189 members. Not all countries are members. Cuba
and North Korea, for example, are not members.
The primary aims of the IMF include:
to promote international monetary cooperation
to facilitate the expansion and balanced growth of international trade
to promote exchange rate stability
to assist in setting up a multilateral system of payments
to make resources available (with adequate safeguards) to members
experiencing balance of payments difficulties

and the World Bank
The International Monetary Fund
These activities have been central to the development of global trade
since a stable system of international payments and exchange rates is
necessary for trade to take place between two countries. In carrying out
its responsibilities, the IMF has three main functions, which are known as
surveillance, technical assistance and lending. The first two are in line
with its mission of promoting global growth and economic stability by
encouraging countries to adopt sound economic policies. The third
function is used where member countries experience difficulties in
financing their balance of payments.

and the World Bank
The World Bank
The World Bank was established in 1944. Its initial aim was to help rebuild
European countries devastated during World War II. Like the IMF, the
World Bank’s headquarters are in Washington DC. There were 189
member countries in 2019.
The World Bank has set two goals for the world to achieve by 2030: to end
extreme poverty by decreasing the percentage of people living on less
than $1.90 a day to no more than 3 per cent; and to promote shared
prosperity by encouraging income growth of the bottom 40 per cent for
every country. The World Bank offers support to low- and middle-income
countries through internal investment payments such as building new
roads, improving infrastructure and constructing new health facilities.

and the World Bank
The World Bank
The World Bank Group comprises five institutions. These are:
International Bank for Reconstruction and Development (IBRD)
International Development Association (IDA)
International Finance Corporation (IFC)
Multilateral Investment Guarantee Agency (MIGA)
International Centre for Settlement of Investment Disputes (ICSID).
The IBRD assists middle-income and creditworthy poorer countries while the IDA
focuses on the poorest countries. Grants are only provided to the world’s poorest
economies. Loans cover areas such as:
health and education – in order to enhance human development in a country for
improving sanitation and combating HIV/AIDS
agriculture and rural development – for irrigation programmes and water supply
projects
environmental protection – for reducing pollution and for ensuring that there is
compliance and pollution regulation
infrastructure – roads, railways, electricity
governance – for anti-corruption reasons.

and the World Bank
The World Bank
Loans tend to be linked to conditions that involve wider-reaching changes being
made to the economic policies of the recipient economies. The IMF and World Bank
have been criticised for imposing the so-called ‘Washington Consensus’ on
middle- and low-income countries. The Washington Consensus was devised by a
US economist, who proposed ten economic policy prescriptions. These policy
prescriptions, which include privatisation, deregulation and trade liberalisation, are
based on increasing the role of market forces. Such an approach may increase
efficiency, which would increase productive potential. However, it may increase
income inequality, and may not work if the problem that is holding back
development is not too much government intervention but market failure and lack
of financial markets.

SUMMARY
🌍The Role of the IMF & World Bank (52.5)
🏦The International Monetary Fund (IMF)
📅Founded: 1944
📍HQ: Washington, DC
🌍Members: 189 (e.g., Cuba & North Korea are NOT
members ❌)
📌Main Goals:
✅Promote monetary cooperation 🤝
✅Support balanced global trade growth 📈
✅Ensure exchange rate stability 💱
✅Facilitate international payments 💳
✅Provide financial support to countries with balance of
payments problems 💰
🔹Main Functions:
🔍Surveillance – Monitor economies for stability 📊
📚Technical Assistance – Advise on economic policies 🏛️
💸Lending – Provide funds to help nations in crisis 🏦
📌Key Contribution:
✔️Helps maintain stable global trade by ensuring smooth
international payment & exchange rate systems 🌎💵.
🏛️The World Bank
📅Founded: 1944
📍HQ: Washington, DC
🌍Members: 189
📌Main Goals (By 2030):
1️⃣End Extreme Poverty – Reduce % of people living under
$1.90/day to ≤3% 🚫💰.
2️⃣Promote Shared Prosperity – Boost incomes of bottom
40% in all countries 📈.
📌Support for Low- & Middle-Income Countries:
🏗️Infrastructure: Roads, railways, electricity 🚉⚡
🏥Health & Education: HIV/AIDS programs, sanitation 🚰📚
🌿Environmental Protection: Pollution control 🌱♻️
🚜Agriculture & Rural Development: Irrigation, water
projects 💧🚜
⚖️Governance: Anti-corruption programs ❌💰
📌The World Bank Group (5 Key Institutions):
1️⃣IBRD – Supports middle-income & creditworthy low-
income countries.
2️⃣IDA – Provides grants/loans to the poorest nations 🌍.
3️⃣IFC – Supports private sector development 🏢.
4️⃣MIGA – Offers investment guarantees 💵.
5️⃣ICSID – Handles investment disputes ⚖️.

SUMMARY
💡The "Washington Consensus" Debate
📜Washington Consensus = 10
economic policies favoring free markets
(privatization, deregulation, trade
liberalization).
✅Benefits:
✔️Improves efficiency & productivity
📈
✔️Encourages foreign investment 💰
❌Criticisms:
⚠️ Increases income inequality 📉
⚠️ Ignores market failures & financial
system weaknesses 🚫🏦
⚠️ Harsh conditions on loans may hurt
development 🔒
🔎Key Takeaway:
✔️IMF = Financial stability &
crisis management 💰🌍.
✔️World Bank = Long-term
development & poverty reduction
🏗️🏥.
⚠️ Policies can be controversial
– Can boost growth, but may
widen inequality if not tailored
properly 📉⚖️.

Chapter-52-Relationship-between-countries-at-different-levels-of-development-đã-nén.pdf

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