2.2 Trade on Different countries

Question 1

Eswatini

Answer 1

• 50% under $2 a day
• State encouraged sugar farming - hard climate, rainfall and excess labour
• Joined farm co-operatives to share and trade crops
• Invested in dams and roads to create better access and interconnectedness - yields rose
• Invested in knowledge base - how to farm sustainably
• Fairtrade premium on top of price they get for sugar - empowers workers with training, toilets, showers and other needs
• Living standards rose - still need corresponding income rise to pay for electricity, water, etc.
• Not in control of the price but instead price makers such as the EU do through demand
• Lack of demand for sugar, risk of shock - no infrastructure to resolve - drought and environmental impacts may be issues

Question 2

Fairtrade

Answer 2

• Coffee 47% and Bananas 19%
• Sainsbury’s dropped FT tea and instead uses Green and Black’s chocolate to make more profits as FT is less profitable - questions whether real fair scheme
• Most producers aren’t actually poorest, just meet demand e.g. Mexico does not require aid, gets 31% of certifications of Coffee which accounts for only 2% of Mexicos revenues yet Ethiopia and Burundi only received certification in 2009
• MICs account 54%, LICs 21%
• Focuses primary sector so other sectors fall behind.

Question 3

Malawi Impacts/Causes

Answer 3

• Landlocked, GDP/cap $163
• Exports declined from $440m to $310m
• Tobacco and tea account 90% of exports, fell in value.
• Agriculture 34% of GDP, services 48% and manufacturing 18%
• 50% employed in agriculture
• In 80s trade liberalized, facing severe trade and economic problems due to declining commodity prices, weak infrastructure, lack tech, high cost, lack of finance, weak institution, high debt
• High debt as in 70s western banks lent large amounts, interest rose and export prices fell - food shortages and drought as well as civil war led to further debts
• $100m of debt left each year

Question 4

Malawi IMF

Answer 4

• Joined HIPC in 2000 but debts cancelled in 2006 after paying $440m in repayments - in the year before 9.6% spent on debt servicing and 4.6% on healthcare
• IMF pushed privatisation, end agricultural subsidies to reduce budget deficit - created food crises, drought occurred, had to import maize at much higher cost than subsidy.
• 2000s stood up to IMF reintroduced fertiliser and seed subsidies, became net exporter of maize - worse for development but better for food
• 2006 finally had $2.3bn debt cancelled, payments fell by $40m a year, allowing significant spending

-Commodity prices fell again, and Kwacha fell in 35% against the dollar increasing the size of external debt to $1.9bn - needed grants to reduce poverty