CHAPTER 5
WHO IS PAYING FOR IT?
In order for economic activity to take place – someone needs to pay for it.
Amount of money = amount of Economic development
It determines:
•the amount of capital that can be purchased

•# of people who can be paid to work in development activities
Money comes from so many different places….
80-90 Precent of it comes from 
the DEVELOPING NATIONS THEMSLEVES
Within each developing Country... Individuals and Companies pay for Economic Development.
1.) They pay Taxes

2.) earn money from exports

3.) They use their SAVINGS in 2 ways  - (what is left after taxes and expenses)
1.) Directly – buying something

2.) Indirectly – savings accts (banks can then use it)
But the Developing Nations aren't done there...
What else makes up that 80-90%?!?!?!?!?!
Governments of developing countries:
1.)  They Get money from taxes (sales and import and income) and they spend that Money on Develpoment Projects 

2.) They also borrow from private banks within their own borders
Alright.  that is where the Developing NAtions contributions end...  but don't even forget that 80-90 percent comes from their own country....
Who else gives money?
Governments from other Countries
Grants (not repaid) and loans (repaid) from industrial countries
they give these grants and loans for specific projects - they refer to this as “Foreign aid”, or “development assistance”
These foreign Countries are happy to help for several reasons....Development assistance doesn’t cost a lot
Amounts are not large
Get the money back eventually
Grants pay themselves back with a business relationships
The Third place where this money comes from is "International Organizations" The United Nations increase awareness and inform these organizations of development activities in other Developing Nations
oh, and there are like a million of em
UN Dev. Program – grants to dev nations recommended projects – Most of the grants go to the world’s poorest countries
Food and Ag Org.
Studies and recommends how food, and crops can be increased: healthier animals, fish, forests
International Labor Org – training, increasing jobs, improving working conditions
UN Educational, Scientific, Cultural Org – teachers, adult literacy, schools
UN fund for Population Activities – researches and attempts to slow population
UN Children’s Fund – encourages activities that benefit children
UN Industrial Dev. Org – build up their industry/ physical capita
World Health Org.- trains health workers, public health services, research health problems, prevent control disease
UN Environmental Program – monitors world environmental condition
World Bank – largest provider of funds for all of these International Organizations, they work with the UN, and focus on engaging in specific projects in over 100 countries.  They come in the form of:

Loans -  get repaid over time, 15-20 yrs…but low interest rates. – 

Credits – no interest – 40 yrs.  (poorest countries)
Other Org.
Religious Groups – build schools, colleges, hospitals
Volunteer Org – Peace Corps
Private Foundations – research problems, provide scholarships
International Development Association – This is the part of the World Bank that is in charge of deciding on specific countries and certain amounts of money for development assistance.
Other banks   -“REGION BANKS”
Banks – specific to a region – 
•The African Development Bank
•The Asian Development Bank
•The  European bank for Reconstruction and Development
Similar to the World Bank:
1.) Loans are for specific E.D. projects 
2.) low interest rates 
3.) long repayments periods

But it isn’t the “WORLD” it is the “REGION”
Private Banks and Companies – as they get stronger – qualify for loans and banks from other countries will provide assistance
1.) some banks often work together to provide even bigger loans.
2.) Banks can loan to an industry so they can expand.  

*****Only if profitable and reliable to be paid back.
3 problems in recent years

1.) higher prices means cutting back imports of goods and services
2.) higher interest rates, growing debt – 
3.) diminishing world trade
Private Companies - supply equipment machinery on special terms – 

Set up factory –“win-win” 
DN: (jobs, skills,) 
Company: (lower costs)
What is the 4th Source of this $$$
and the final one?