Relationship between countries
Links between countries
Each link has good and bad sides:
- trade — raises incomes, but many developing countries rely on a few primary exports with swinging prices.
- aid — funds schools/roads, but may create dependency or be wasted.
- debt — can fund development, but repaying drains a poor country's budget.
- foreign direct investment (FDI) by a multinational — brings money, jobs, technology, but profits may flow abroad and workers be poorly treated.
- migration — eases unemployment and brings remittances, but can drain skilled people.
Practice
Foreign direct investment (FDI) by a multinational can bring a developing country:
FDI brings capital, jobs and technology, but profits may leave and workers may be poorly treated.
Practice
Remittances are:
Migration can bring remittances (money sent home), though it may also drain skilled workers.
Practice
Relying on a few primary exports is risky because their prices can swing sharply.
Primary commodity prices are volatile, so dependence on a few exports makes income unstable.
You've got it
Key idea
- trade, aid, debt, FDI, migration all link rich and poor countries — each with pros and cons
- developing countries often depend on a few primary exports (volatile prices)
- FDI brings jobs/technology but profits may leave; migration brings remittances but can drain skills