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this is a school essay i did a ccouple of months ago when we were studying 3rd world debt in geography. it is a letter to the world bank.
Dear sir or madam
I am writing to you to explain the problems of 3rd world debt. Many LEDC's are in lots of debt I shall explain the reasons why this is and some possible suggestions to help clear these debts.
LEDC means less economically developed country. An LEDC is a country that is in poverty. For example they have high death rates and low birth and literacy rates. An MEDC more economically developed country, it is a rich country, it has low death rates and high birth and literacy rates. MEDC's such as the UK and the U.S.A also have a higher life expectancy and have services such as the NHS and the state pension.
My two main concerns about 3rd world debt are the development gap and why LEDC's take out loans. Firstly I will tell you about the development gap. There are many reasons why the development gap is so big and those reasons are usually split into three categories. Historical, economical and socio-economical.
The historical reasons include, Ghana was a British colony for many years, this means that Britain sold all its natural resources such as cocoa and cotton but gave Ghana none of the profit. Another reason is that during the slave trade Britain sold many of Ghana's healthy adults as slaves.
The environmental reasons include, it has high natural disaster rates and because it doesn't have much money can't train people to deal with them, also,its mostly stony dessert so there is not much land to grow crops and the little land there is is very dry and brittle due to the very little rain they have. Finally the water they drink is home to millions of diseases and parasites such as cholera and Gilly worm. this last reason links into the last category, socio- economical.
More reasons in this category include the fact that millions of the citizens of 3rd world country's are suffering from aids other reasons include they have to pay back millions of $ worth of loans each year and the little money people do earn go straight to paying of those debts. Another reason is that there are very few schools so people cant learn the skills the country needs, and when people do live by a school they cant go because they can't afford it as they need to provide their own pens and paper as well as paying for the education.
My other main concern is why LEDC's take out loans. The answer to this is simple, but if you dig deeper you will want to what they do with the money well the answer to this is they pay off loans, the advantages to this are they can get some of the more expensive debts out of the way but the dis-advantage to this is it puts them in more debt. Banks want LEDC's to lend money from them so they can boost interest rates so the country's have to pay more witch puts the bank in a better of and gets them more money.
The big problem with 3rd world debt is that interest rates are so high so by the time the country has payed of the debt they have payed 3 or 4 times more than they actually borrowed. Say someone borrowed money effectively they would have to buy the right to borrow money by paying a certain amount of interest with each payment so the longer it takes to pay of the debt the more interest you have to pay. This is a problem with 3rd world debt because they don't have a lot of money, this means they can only pay a little bit of at a time so they will have to pay lost of interest this makes them actually pay back lots more money than they actually borrowed so they take out more money to pay back those loans which puts them deeper in debt, its a viscous cycle.
There are many ways in witch we could help solve the problem with 3rd world debt, the most drastic of witch would be to cancel all debt, another would be to cut all interest, on a smaller scale we as people could make donations towards paying of the debts or children could even do small school fund raisers to raise money to pay of the debt.
The benefits of 3rd world country's having no debt would be it could start fresh tho money the country dose earn can go to helping all the citizens that are in poverty, for example it would benefit grace in Ghana so she could buy more clothes and food,she could send her children to school and she could get a well payed job without having the children out there with her. It would also help villages in 3rd world country's because they could save up the money to get a fresh water pump or well in the village so the villagers don't have to walk 2 miles to get water.
I think LEDC's could help their situation by instead of farming crops and selling it, they could farm food for them to eat themselves or they could share the food within the village and the food left over they could sell and get more money for the village so then it makes it more of a community as well as improving their situation. This will help by getting the village more money so they could spend it on fertilizers and machinery for the crops, that will get them a better harvest then they will have more left over food and they can sell it that will get them more money and so on and so forth.
CHARETY WORK
charities such as 'save the children' and 'world vision' work round the world and round the clock to save children in 3rd world countries form poverty and disease. And Christian aid challenges the causes of poverty and tries to make change happen. The problem is that these charities rely on donations and gifts from people like you and me to make a difference. Another charity has set up a milk goat plan. What this means is there is 2 milk goats. They are given to a village. They bread and produce more milk goats which are then given to another village or family then they bread again and there offspring are also given away. This chain keeps going until every village or family have a milk goat to produce milk, this milk can then be made into such products as goats cheese and goats yogurt This is a good idea because it is a plan that needs little interference from other countries to make it work. It is called helping yourself.
To conclude this letter, there are three main categories witch are the main causes of 3rd world debt. Historical, economical and socio-economical. LEDC's take out loans to pay of some of the debt by doing this they get themselves into more debt. Debts have accumulated to so much over the past few year due to interest rates being so high. There are a number of solutions to third world debt witch range from taking off all debt to small school fund raisers to help pay off the debt. Having no debt would benefit 3rd world country's in so many ways, they could start fresh , and help family's in deep poverty and get them a better form of life. And finally villages in LEDC's could put themselves in a better position by putting all the crops harvested into a big bundle and share it equally as a village and all the food that is left over can be sold to get the village more money. That's a quick overall summery to conclude this letter.
Please take all this into accountBethany Kirkham
tell me what you think
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