Econ: Summit Foreign Aid


foreign aid
Foreign aid in the context of the Summit, is a transfer of cash from a Division 1 Country to a Division 3 Country. Division 1 Countries have the obligation to provide foreign aid cash for the development of the less fortunate countries of the world. Hey, they can afford it. They’ve got the highest living standards in the world, and Division 3 Countries need a helping hand. Each Division 1 Country is given extra cash to provide foreign aid to the Division 3 Countries. Each Division 3 Country has foreign aid vouchers as evidence of their need for aid. The exchange takes place between a Division 1 Country with foreign aid cash and a Division 3 Country with a foreign aid voucher.

Division 1 Countries
The exchange rate between foreign aid cash and foreign aid vouchers is 5 WELCOs = 1 foreign aid voucher. For example, both Australia and Canada are Division 1 Countries. Australia has 10 WELCOs in foreign aid cash and Canada has 30 WELCOs in foreign aid cash. Based on the exchange rate above, Australia must use its 10 WELCOs to buy 2 foreign aid vouchers and Canada must buy 6 foreign aid vouchers with its 30 WELCOs. So, how do we know if both of these Division 1 Countries actually gave away the cash? At the end of the trading session, Australia must be able to show 2 foreign aid vouchers and Canada must be able to show 6 foreign aid vouchers from Division 3 Countries as proof that they met their foreign aid obligation. Without the foreign aid vouchers as proof, Australia and Canada would not have met their foreign aid obligations and will have 15 points deducted from their overall score.

Division 3 Countries
Now let’s look at two Division 3 Countries, Angola and Bangladesh. Angola has 3 foreign aid vouchers and Bangladesh has 4 foreign aid vouchers. Both Angola and Bangladesh will exchange each foreign aid voucher for 5 WELCOs with a Division 1 Country. Angola will receive a total  of 15 WELCOs and Bangladesh will receive 20 WELCOs. So, what would you do with the cash? Your goal as Economic Advisor is to improve living standards and the cash will help you gain your imports or buy Long Term Development Projects. Be sure to include the foreign aid cash in your strategic plan, outlining how the cash would be used to improve living standards.

Division 2 Countries
Typically, Division 2 Countries are not wealthy enough to give aid and not poor enough to receive aid. Some exceptions exist, so check your exports and cash endowments to determine whether your country will be involved in a foreign aid transfer.

Each team will complete in the Player’s Guide:
1. Investment Rates and GDP per capita graph on page 22
2. Standard of Living Analysis #1 – 8



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