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How can the international community work to decrease socioeconomic disparities and create more global equality?

INTRODUCTORY VIDEO

THE PROBLEM

Goal 10 .:. Sustainable Development Knowledge PlatformWhat is the right to life? Is it the right to simply being alive, or it the ability to live well? Does that include a access to basic necessities such as shelter, water or education? If you look closely at some of the global trends, you may notice that the idiom “the rich get richer and the poor get poorer” is applicable to our world today. Countries on the bottom of the GDP list have been stuck there for decades. This inequality is prolonged by the instability of many countries and the ineffectiveness of external financial support. Those who are unfortunately living in places with a lower GDP have an overall lower quality of life. Healthcare, access to education, ability to support your family, access to clean water, things that we consider a human right are all compromised because of global inequality and the way in which the international community has addressed this issue has only allowed this cycle of poverty to continue. 

Wealth distribution within the world

While it can be disputed that there are lots of efforts being put towards this issue, the main point of contention is whether it is being used effectively. Much of the aid that is given is either not being used properly, given to the wrong people or being given for the wrong reasons which is why this issue is still so prominent today. If you look closely at the countries receiving aid from some of the most developed countries, a large portion isn’t being given to those at the bottom of the GDP list but rather those who will prove to have greater and more immediate benefits. This isn’t just a matter of human rights but also the impact of politics on social issues.

The scale of global inequality is quite simply staggering.

Winnie Byanyima

While humanitarian efforts are a strong short-term solution, there needs to be an approach to tackle the root of the problem. It is unrealistic to expect developing countries to deal with this issue on their own which is why this calls for international involvement. The problem of global inequality is massive and there is a lot of progress needing to be made towards this cause. With that being said, using game theory, we will look at what different types of aid can be given to help create a long-term response to this issue.

PLAYERS AND STRATEGIES

Developed Countries

    A. Do nothing

    B. Give monetary aid (eg. bilateral or multilateral)

    C. Help improve infrastructure

    D. Give foreign aid (eg. humanitarian, trade, project, developmental, etc.)

Developing Countries

    A. Refuse all aid

    B. Accept all aid unconditionally

    C. Accept aid that does not come with debt

OUTCOMES AND UTILITIES

Matrix to model all possible outcomes and combinations with the different strategies

Utilities

Many of the outcomes have the same values because realistically, the outcome would be the same. For example, if a developing country chose to refuse aid, the outcome would also be that the country would not receive aid, no matter what the developed country chose to do. Many of these outcomes are factoring in that it is beneficial for developed countries to give aid to developing countries because it creates a more benevolent reputation for that country as well as better foreign relations, however, it is also financially beneficial for developed countries to gain influence over developing countries. For this model, I chose to assume that developing countries that want to accept aid are in need of aid and that if a developing country chose to refuse aid, that they didn’t need/want it. Keep in mind that utilities are loosely assigned and usually differ from person to person.

(Developed Country Strategy, Developing Country Strategy): Outcome

Utility Range (-5, 5)

  • (A+A): a 
    • Developed Country: 0
    • Developing Country: -1
  • (A+B): b
    • Developed Country: -1
    • Developing Country: -5
  • (A+C): c
    • Developed Country: -1
    • Developing Country: -4
  • (B+A): d
    • Developed Country: 0
    • Developing Country: -1
  • (B+B): e
    • Developed Country: 4
    • Developing Country: 1
  • (B+C): f 
    • Developed Country: 4
    • Developing Country: 3
  • (C+A): g
    • Developed Country: 0
    • Developing Country: -1
  • (C+B): h
    • Developed Country: 5
    • Developing Country: 1
  • (C+C): i
    • Developed Country: 2
    • Developing Country: 4
  • (D+A): j
    • Developed Country: 0
    • Developing Country: -1
  • (D+B): k
    • Developed Country: 5
    • Developing Country: 5
  • (D+C): l
    • Developed Country: 5
    • Developing Country: 5

SOLVING THIS GAME USING GAME THEORY

Movement diagrams model each player’s “favourite” strategy to get the best outcome for each of the other player’s possible strategies. If the best outcome for both players overlaps, then that outcome would be the Nash Equilibrium. Using the movement diagram, you can see that there are two places where the best outcomes for both players overlap. This is because both outcomes have the same values because they would have the same outcome. 

Nash Equilibrium solution to the game is DB (5,5) and DC (5,5)

In this diagram, the x-axis models the payoffs to developed countries and the y-axis models the payoffs to developing countries. The Pareto Optimal Outcome is also (5,5) meaning that both Nash and Pareto agree (which isn’t always the case). Pareto Optimality shows the best outcome(s) for both parties. On the graph, these solutions are the furthest to the right and the highest which indicates which solutions are also more likely to be socially acceptable.

Payoff Polygon shows that the Pareto Optimal Outcome is (5,5) (in blue)

WHAT WOULD THIS LOOK LIKE AND WHY ARE THERE TWO SOLUTIONS?

Foreign aid is given in a more charitable manner whereas financial aid and imposing infrastructure doesn’t always just have good intentions for the receiving country. With that being said, accepting foreign aid would have the same benefits whether it is accepted unconditionally or not. From a more theoretical standpoint, choosing to accept without debt would be a better strategy seeing that there are more optimal outcomes for a developing country but realistically, there is much more that goes into these strategies than just refusing and accepting aid.

CALL TO ACTION

While the most effective solutions to deal with global inequality lie in the hands of our governments, an effective way to help combat this issue is to raise awareness. This issue is something that everyone is somewhat aware of, but not everyone truly understands the magnitude of the disparities we continue to have in the status quo. By raising awareness and acknowledging that this is more than just statistics, but actually real people who are struggling to survive, will help facilitate the action to make tangible change. Society needs to recognize that it is our responsibility to help advocate for human rights and improve the standard of living. Other than raising awareness, supporting non-governmental organizations are also a great way to help create a more immediate impact. Organizations like UNICEF, Doctors Without Borders, and many others are amazing humanitarian nonprofits that create a more immediate and tangible impact. Lastly, looking at your own community and supporting local nonprofit organizations can help decrease their socioeconomic disparities and create a positive change in your community.

Works Cited

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COMMENTS: 4
  1. April 24, 2020 by Jeremy

    I think it was a great spin that you took on this issue. For game theory, I think people generally assume it is more theoretical and only has applications in the real-world when calculating odds or small scale situations. Looking at it from an international lens was a great way to differ from the perceived norm of what game theory is applicable to and it was really interesting to see what your final conclusion was. Great job!

  2. April 24, 2020 by Bella Steiner

    Hi Natassia! I loved reading through your project. I think it’s really interesting to see game theory be used in a global crisis context. You gave a really thorough rundown of what this issue really means, and what can be done about it. The issues you brought up with foreign aid and whether or not developing countries were accepting or refusing that help was a huge eye-opener for me. Again, awesome work!

  3. April 25, 2020 by Mahika Halepete

    The game theory approach was absolutely fascinating, and I had never thought of it that way. Your explanation was so clear, and I learned how I might apply that game theory approach to many world conflicts with two “players.” I think something to consider, which you have mentioned here, is that foreign aid can be really positive but also negative depending on how it is given out. The people receiving it should be the priority, and we should always prioritize solutions that minimize harm and maximize the future of the community by incorporating long-term, sustainable systems that can eventually function and grow without aid.

  4. April 25, 2020 by Jenna

    Hi Natassia! This project is super interesting. I would have never thought that game theory could be used for financial aid – interesting!

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