Closing the Gap

Seven strategies, two questions

The specification lists seven ways of reducing the development gap: investment, industrial development, aid, intermediate technology, fair trade, debt relief and microfinance loans. Learning the list is easy and worth very little, because every question on this element asks you to compare them, and a list cannot be compared with itself. Two questions turn the list into an argument. The first is what does it act on? Some strategies work on the present: emergency aid feeds people this month, debt relief frees money that was going out in repayments this year. Others work on the trajectory, changing what a place will be able to do in twenty years: a technical college, a road, a hand pump that a village can maintain itself, a small loan that lets someone buy the equipment their trade depends on. And some things cannot be acted on at all, because no strategy moves a country closer to a major market, gives it a coastline or changes its climate. Sorting a strategy into one of those three tells you immediately what it can and cannot be expected to achieve. The second question is who ends up better off? This is the one the mark scheme is really asking, and it cuts across the first. A large foreign-owned factory and a village water scheme may both be described as development, and the money they generate ends up in very different places. Aid given on condition that the recipient buys goods from the donor country returns much of its value to the donor. A fair trade arrangement is designed so that a larger share reaches the grower. Ask both questions of every strategy and you have a comparison. This module works through the seven, sorted by what they act on and judged by who benefits. Tourism, which is the eighth, belongs to the sibling module.

Five strategies, precisely

Each of these is commonly used loosely in answers. The detail that earns marks is in the second half of each definition.

Follow a small loan

These six stages describe how a microfinance loan can change what a household is able to do. Put them in order.

• A trader has a skill and a customer base but no security to offer a conventional bank
• A small loan is made without the collateral a bank would require
• It buys the equipment or stock the trade has been limited by
• Output rises, and so does the income the household can rely on
• The loan is repaid, and a further and larger one becomes possible
• Some of the additional income goes on schooling, which changes what the next generation can do

Why can big investment disappoint?

A foreign company builds a large processing plant in a lower-income country. Which answer best explains why this may do less to reduce the development gap than the scale of the investment suggests?

• It depends on where the value ends up. If the profits are returned to shareholders abroad, the senior technical posts are filled by staff brought in, the equipment is imported and the raw material leaves as a part-finished product, then the money passing through the country is much larger than the money staying in it. The plant is real and the jobs are real, and the benefit is still concentrated outside. The question to ask of any investment is not how large it is but how much of what it generates remains, and who holds it.
• Local workers usually lack the skills to make such a plant productive.
• Large investments are always less effective than small ones.
• The money will inevitably be misused by those receiving it.

Sorted by what they act on

This is the frame that makes the seven strategies comparable. Each column asks the same second question underneath: once you know what a strategy acts on, ask who ends up holding the benefit.

Match each account to its strategy

Two questions, then a judgement

The grade9 note for this element says that strategies must be compared on sustainability and on who genuinely benefits, rather than named. The two questions from the opening card are how you do that, and they are worth asking in writing. What does it act on? Sorting a strategy into the present, the trajectory or the unchangeable tells you what it can be held responsible for. It is not a criticism of emergency aid that it builds nothing, any more than it is a criticism of a technical college that it feeds nobody this week. Judge each against what it is for, and a comparison stops being a competition between unlike things. Who ends up better off? Follow the value rather than the headline. Ask who owns the thing that was built, where the profit goes, who can repair it when it breaks, and what happens when the funding stops. That last question is what sustainability means here, and it is why small locally-run schemes often score well against far larger ones despite doing less in absolute terms. Two warnings about how you write, because this element catches people out on register rather than on knowledge. Never blame a country for its own position: explain the situation instead, and if training or infrastructure is missing, say so as a gap to be filled rather than as a failing. And never write about people as though they were waiting for somebody else to act. Every strategy here works through people making decisions about their own circumstances, and answers that describe them as recipients of a plan rather than participants in one read badly and score badly. For a judgement question, say which criterion you are using. Judged on speed, aid wins. Judged on what survives the funding ending, intermediate technology and microfinance win. Naming the measure is what separates a conclusion from a summary.

Complete the strategy facts

Aid comes in several forms, and the distinction that matters most in an answer is between short-term emergency aid and long-term _____ aid, which funds schools, clinics and infrastructure. Aid given on condition that the recipient spends it on goods from the donor country is called _____ aid, and a large share of its value returns to the giver. _____ technology means equipment matched to the skills and materials available locally, so a hand pump a village can repair itself outlasts a machine nobody can mend. Fair trade guarantees producers a floor price and pays a separate _____ for community projects. Microfinance lends small sums to people with no _____ to offer, so that credit reaches those the banking system cannot serve.

Spot the three sound statements

Select the THREE statements that could stand as they are in an answer.

• A useful test of sustainability is what happens when the funding stops: a scheme whose equipment can be maintained locally continues, while one that depends on imported parts or outside expertise does not.
• Tied aid returns a substantial part of its value to the donor country, because the recipient is required to spend it on goods or services from the donor, so the headline figure overstates what arrives.
• Fair trade involves two separate payments, a guaranteed floor price for the crop and an additional premium for the community to spend on projects it chooses, and answers often merge them into one.
• The gap persists mainly because some countries have not made enough effort to develop.
• The largest investments are always the most effective way of reducing the development gap.
• Development strategies work best when they are designed and run entirely by outside organisations.

A 9-mark comparison, marked

"Small-scale strategies are more effective than large-scale ones at reducing the development gap." Assess this view. [9 marks] Strategies can usefully be sorted by what they act on. Emergency aid and debt relief act on the present, relieving immediate pressure or freeing revenue that had been leaving as repayments, as under the initiative launched in 1996 and the agreement reached at Gleneagles in 2005. Investment, industrial development, intermediate technology, microfinance and fair trade act on the trajectory, changing what a place will be able to do rather than how it is coping now. Nothing on the list alters the physical starting conditions, which is why gaps close slowly even where strategies succeed. Small-scale strategies do well on sustainability, which is the strongest argument for the statement. Intermediate technology, set out by Schumacher in Small is Beautiful in 1973 and pursued by the organisation he founded in 1966, is deliberately matched to local skills and materials, so a pump a village can repair keeps working after the funding has gone, where an imported machine stops at the first failure. Microfinance, developed by the Grameen Bank in Bangladesh from work begun in 1976, reaches people the banking system cannot serve and puts the decision about what to buy in the hands of the person who knows the business. Both keep the benefit local, which is precisely what the mark scheme means by asking who gains. However, small schemes are small. They change one household or one village at a time, and they do not build a port, a power supply or a hospital, all of which require investment at a scale only governments and large companies can reach. The real question is therefore not size but retention: a large investment whose profits leave, whose senior posts are filled from abroad and whose raw material is exported part-finished delivers far less than its headline suggests, while one that processes locally and trains local staff can transform a region. Judged on sustainability and on who holds the benefit, small-scale strategies are more effective. Judged on the scale of what can be built, they are not, and a country needs both, which is why the most useful conclusion is that the two work on different problems rather than competing for the same one. What earned the marks: a stated frame at the start rather than a list; named strategies with dated institutions attached; both sides argued with reasons rather than assertions; the distinction between the scale of an investment and the value it retains; and a conclusion that answers the question on two named criteria and explains why the comparison is not really a contest.

Find the two that would cost marks

Five sentences from student answers on reducing the development gap. Two of them would lose marks for how they are written rather than for being factually wrong. Tap those TWO.

• These countries have failed to develop because they have not made the effort that richer countries made.
• Aid given on condition that it is spent on the donor country's goods returns much of its value to the donor.
• The people there are waiting for aid organisations to come and solve the problem for them.
• A pump that villagers can repair with local parts keeps working once the funding has ended, which an imported machine may not.
• Fair trade guarantees a price that will not fall below an agreed level whatever the market does.

Build the retention sentence

Assemble a sentence about investment that distinguishes scale from benefit.

Four decisions, four timescales

You advise on development spending. Each choice is real, and each is judged by what it acts on and who ends up better off.

• A rural district needs a reliable water supply. One proposal is a large diesel-powered pumping station; another is a set of hand pumps whose parts can be made and fitted locally, with training for people in each village.
• A drought has left a region without food this season. A minister argues that spending on a technical college would do more lasting good than emergency relief.
• A foreign company offers to build a plant that will employ several hundred people. The raw material would be exported part-finished, the senior technical staff brought in, and the profits returned to shareholders abroad.
• A student writes that a country remains poor because its people have not worked hard enough to develop it, and asks whether that is a strong point.

Compare the strategies

Assess the effectiveness of two strategies used to reduce the development gap. [9 marks]

• Differing strategies give something real to compare
• The present or the trajectory
• Where the value goes, not how large the scheme is
• What happens when the funding stops
• Avoid blaming a country for its position or writing about people as recipients of somebody else's plan