The Market, Development and the MDGs

Rachel Auld,


What is international development?  What is a free market? What is trade and aid?  Where is the best place to trade and where do the Millennium Development Goals fit in to all of this?

International development can be broadly defined as any effort to assist nation states, and their citizens and institutions, in various ways, to modernise.” Over the past fifty years, international development has taken many forms, usually focusing on projects to make “underdeveloped” “developing countries” more similar to “developed countries“. It encompasses foreign aid, governance, healthcare, education, poverty reduction, gender equality, disaster preparedness, infrastructure, economics, human rights and environmental sustainability.


International development is related to the concept of international aid but is distinct from disaster relief and humanitarian aid.  Aid is often regarded as a voluntary transfer of resources from one country to another.  Aid should be given for the short term development needs of a country, – the donor determines the amount given which is supplied directly – it is now frequently formed in the form of infrastructure or cohesion improvement, not as cash.

Whereas International trade is the exchange of capital, goods, and services across international borders or territories.  Trade should be long term and should be between equal partners.  Trade can boost a country’s development but only where it is fair and balanced.  Opening up markets to international trade may leave local producers swamped by more competitive foreign producers.  Sustained strong growth over longer periods is strongly associated with poverty reduction, while trade and growth are strongly linked.

Food Aid Distribution in Ethiopia 2

So where does the free market fit into this?  A free market is a market structure in which the distribution and costs of goods and services along with the structure and hierarchy between capital and consumer goods are coordinated by supply and demand.  However, government action (some argue) may be needed in areas where the market doesn’t function effectively. For example, public works to expand the physical infrastructure, or public support for education as an investment in human capital.  A free market is open but not controlled.

trade not aid

The Millennium Development Goals could be used as an example of aid and trade.  They were set up in 2000 to halve extreme poverty rates, to halt the spread of HIV/AIDS, and provide universal primary education, all by 2015.

The MDG are aid driven but in the long term they should/will be free trade maintained.



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