2B.2 Factors of Unequal Development Flashcards
Define globalisation.
The way in which the world is becoming increasingly interconnected through trade, ideas and technology.
Define MNC.
MultiNational Corporation - a company with factories in many countries who sell their products worldwide.
State 4 locational advantages of MNCs relocating from MEDCs to LEDCs.
- Factory workers in LEDCs like Indonesia will work for much smaller wages than in MEDCs such as USA - perhaps 10-20 times less, so MNCs can make more profit.
- LEDC workers tend to work longer hours so more products can be manufactured than in MEDCs where workers demand more leisure time.
- In MEDCs, workers are members of unions and may strike if work conditions are unsatisfactory, but in LEDCs the power of unions is less and workers are unlikely to strike, therefore maintaining production.
- There are less strict controls on pollution and emissions from factories in LEDCs so MNCs can exploit this and save money on the costs in MEDCs.
State 2 ways in which globalisation helps development in LEDCs.
- Brings work to the country and employs local people who may receive a guaranteed income often at higher levels than the local average.
- Improves the education and technical skills of local people when the MNC provides training, enabling them to improve their status in society.
State 2 ways in which globalisation hinders development in LEDCs.
- Local labour force may be poorly paid with some reports suggesting that workers may just receive $1 a day in some countries from MNCs. This does not provide people with a sustainable income.
- MNCs can cause harmful pollution and environmental damage because environmental laws are not enforced in many LEDCs. EG. Unilever dumped mercury in Kodiakanal, India, having a negative effect on people’s health and wellbeing.
Explain why NICs are popular locations for MNC factories.
Labour costs are still quite low, but rapid industrialisation means that the governments have invested in their infrastructure, making the import and export of goods possible for large companies.
Define trade.
The buying and selling of goods and services between one country and another.
What is the difference between imports and exports?
Imports are the goods bought from other countries whereas exports are the goods a country sells to pay for its imports.
Define trade surplus.
When a country earns more money from the goods it exports than it needs to spend on buying imports. Countries with a trade surplus can invest money in projects which help the country develop and improve the people’s quality of life.
Define trade deficit.
When a country has to spend more on imports than it earns from exports. These countries are poor so cannot afford to invest in industry or improve healthcare or infrastructure. They may have to borrow money and get into debt.
Define trade balance.
The difference between the cost of imports and the value of exports.
Describe how RELIANCE ON PRIMARY PRODUCTS is a problem of trade for LEDCs.
Often LEDCs are reliant on the export of 1-2 primary products to help them generate foreign currency, eg. 90% of Zambia’s exports come from copper. This is very risky, especially agricultural products as bad harvest can mean that vital export earnings are lost due to slight weather changes. Prices for primary products tend to fluctuate more than secondary manufacturing goods. Therefore countries wishing to develop and improve their trade balance need to diversify their exports.
Describe how TARIFFS is a problem of trade for LEDCs.
Tariffs (custom duties attached to imports) give an advantage to manufacturers of locally produced goods over similar goods that are imported. They also help to raise revenues for governments. These tariffs must be paid by any goods coming into an EU country, eg. palm oil from Indonesia will face 8% tariff or 16% if refined. This will raise its selling price within the EU and the Indonesian producers are likely to sell less and make less profit.
Describe how TRADING BLOCS is a problem of trade for LEDCs.
Most countries in the world are part of at least one trading bloc. This allows imports and exports to be made without incurring tariffs. It encourages ‘free’ trading and helps to protect the prices of goods produced within the bloc. Eg. UK and Spain are part of the EU bloc and so can trade easily with each other. However most LEDCs are in their own trading blocs (eg. UNASUR) so find it difficult to sell goods into blocs such as the EU without having to pay costly tariffs.
