The document discusses the importance of international trade, which has significantly increased since 1970, and its relationship with economic development, particularly in less developed countries (LDCs). It highlights concerns regarding unfair trade practices that hinder LDCs' growth and how aid provisions can sometimes be counterproductive. Furthermore, it contrasts different types of aid and critiques the effectiveness and impact of aid on local economies.

1. International Trade & Aid
Matthew Mortimer

2. Introduction
 The most vital element of the global economy is
trade. World trade now accounts for 25% of GDP,
double the figure in 1970. In 2005, Germany was the
largest exporter of merchandise by a slight margin to
the USA. The USA tops the list for importers by a
large margin. Commercial services have increased in
trade, but trade in merchandise is still 4x as big.
Less developed countries located in continents such
as Africa contributed far less to international trade.

3. Trade and development
 There is a strong relationship between trade and
economic development. Countries with a high level
of trade are richer than those with low levels. A 2002
Oxfam report stated that if Africa increased its share
of world trade by 1% it would earn an additional £49
billion a year – 5 times the amount that it receives in
aid.

4. Trade can hinder development
 NGO’s argue that trade is the key to development
and it is worth 20 times as much as aid. However,
countries in places such as Africa are often restricted
from trading. Many argue that trading relationships
between MEDC’s and LEDC’s need to become
fairer. Africa’s trade has fallen in recent years, Oxfam
predict that if sub-Saharan Africa maintained its
exports at the same level as 1980, its economy
would be worth an extra $280 billion a year.

5. Trade negotiations & agreements
 In contrast, poorer countries and LEDC’s have been
pressured to reduce their own tariffs and open their
markets to foreign competition. India was forced to
accelerate the opening up of its markets and food
imports have quadrupled. The result of this is that
prices for domestically produced food have fallen
sharply, as have rural incomes.

6. Trade negotiations & agreements
 Poor countries are often discriminated against by
powerful trade blocs. One example is the EU’s
Common External Tariff. LEDC’s often argue that the
tariff denies them fair access to the EU’s large food
market. Also, excess food production has been
encouraged by heavy subsidies under the EU’s
Common Agricultural Policy. Many countries outside
of the EU see these subsidies as very unfair
competition.

7. Types of Aid
 Bilateral aid – Aid supplied directly form one country to
another
 Multilateral aid – Aid given by a number of different
countries together through international organisations
 Non-governmental aid – Aid given by charitable
organisations such as Oxfam
 Short term emergency aid – Aid that provides immediate
help to cope with impacts of natural disasters
 Long term development aid – Aid that promotes
development by creating economic growth

8. Arguments against Aid
 Aid encourages the growth of a larger than
necessary public sector
 The private sector is ‘crowded out’ by aid funds
 Aid distorts the structure of price incentives
 Aid is often wasted on projects of political regimes
 The West did not need aid to develop