CAIE A-Level Economics A2 11.5 Relationship Between Countries At Different Levels of Development Questions

Use Table A: AO1 Knowledge and understanding and AO2 Analysis and Table B: AO3 Evaluation to mark candidate responses to this question.
AO1 and AO2 out of 14 marks. AO3 out of 6 marks.
Indicative content
Responses may include:
AO1 Knowledge and understanding and AO2 Analysis
- Aid can be defined as any assistance given to a country that would not be provided through normal market forces.
- There are two main types of aid, humanitarian aid;
development aid.
Development aid would include many different types including: long term
loans;
tied aid;
bilateral aid and multilateral aid.
- Key characteristics of low-income countries would include: low levels of productivity;
high dependency ratios;
low GDP per capita;
significant
dependence on producing and exporting primary goods.
- Low living standards are generally associated with: high poverty levels;
inequality;
poor housing, education and health;
and rapid population
growth.
- Aid that focuses on the provision of new technology, building new factories and training the work force is likely that productivity, output, employment and income levels will rise.
- Aid can increase real wealth and higher levels of tax revenue are likely to
be received by a low-income country's government. This will enable more
expenditure on health, housing and education as well as increased access to more consumer goods. These improvements are generally associated with a rise in the standard of living.

5

AO3 Evaluation

- The links between an increase in aid and an increase in living standards are not clear. Sometimes aid only reaches a relatively small section of the population. For example, due to corruption.

- Different types of aid might produce different outcomes. For example, aid in the form of long-term loans might make it more difficult for low-income countries to escape the cycle of poverty.

- Aid is sometimes given for political reasons rather than the low-income countries where the need is the greatest.

- Tied aid might mean that low-income countries receiving such aid have to purchase goods and services from the donor country which are more expensive.

- Long term dependency upon aid might lead to a welfare mentality and reduce levels of innovation in the low-income country.

- A conclusion might attempt to form an overall judgement on the short term and long-term efficacy of development aid in relation to the improvement of living standards in low-income countries.

Marking guidance: