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Geography - Development In An African Context > 3.3.10 - Influence Of Economic Factors On The Development Of Two Or More Countries > Flashcards

3.3.10 - Influence Of Economic Factors On The Development Of Two Or More Countries Flashcards

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1
Q

Define free trade

A

Goods + services can be bought/sold between countries without tariffs, quotas or other restrictions

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2
Q

Define trade blocs

A

Groups of countries that manage + promote free trade between each other

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3
Q

What are the 3 aspects of trade we look at?

A

1) Protectionism + subsidies
2) Tariffs
3) Quotas

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4
Q

Define protectionism

A

Policies that shield a country’s domestic industries from foreign competition by: taxing imports + using subsidies

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5
Q

What are the 2 main methods of protectionism?

A

1) Taxing imports

2) Giving subsidies to internal companies (making them more competitive)

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6
Q

Does protectionism generally have a positive or negative impact on development in SSA? Why?

A

Negative

Other countries + trading blocs use protectionist policies, limiting the success of SSA selling products there + limiting SSA development

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7
Q

If SSA can’t afford protectionism, how does protectionism impact its development?

A

The countries + trading blocs it trades with use protectionism

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8
Q

Give an example of protectionism limiting development in SSA

A

EU cows

  • Subsidised $2.60/day
  • Hard for SSA sales to compete
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9
Q

Define tariffs

A

Tax imposed on imports

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10
Q

Do tariffs generally have a positive or negative impact on development in SSA? Why?

A

Negative

Trading blocs place greater tariffs on processed goods, forcing SSA to mainly export unprocessed goods which gets them less income

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11
Q

Why does the EU put greater tariffs on processed African goods?

A

So Africa exports non-processed goods and EU countries can process them and sell them for higher prices

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12
Q

Give an example of tariffs limiting development in SSA

A

Coffee

  • Unprocessed coffee exported has no tariffs by EU
  • Processed roasted coffee has 7.5% tariffs by EU
  • 2014: Africa earned $2.4 bill + Germany earned $3.8 bill
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13
Q

Define quotas

A

Limits placed on volume of goods imported

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14
Q

Do quotas have a positive or negative impact on development in SSA? Why?

A

Negative

Trading blocs put quotas on goods imported from SSA to allow the growth of their domestic industries, so SSA profits less + develops less

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15
Q

Why do trading blocs put quotas on goods imported from outside the bloc?

A

Limits competition from outside - allowing domestic industries to grow + prosper

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16
Q

Give an example of quotas limiting development in SSA

A

Sugar

  • SSA produces 7.5 mill metric tonnes sugar / yr
  • 1/5 is sold to EU
  • EU has sugar quotas to help its own sugar producers in N.Europe
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17
Q

What are the 3 types of trade in SSA?

A
  • External country trade (SSA country-other country)
  • External business trade (SSA country-business)
  • Intra-regional trade (SSA country-SSA country)
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18
Q

Is external country trade having a positive or negative effect on SSA? Why?

A

Both

  • Positive: some free trade zones established, helping industrial growth
  • Negative: neo-colonialism
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19
Q

Who is most of SSA’s external country trade with? Most imports + exports are to/from this country

A

China

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20
Q

Give an example of external country trade in SSA

A

China-Nigeria Free Trade Zone (Lekki Free Trade Zone)

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21
Q

What is the Lekki Free Trade Zone?

A
  • 16,000 hectare free trade zone in Lagos
  • Allows for free trade between China + Nigeria
  • $76 billion FDI investment from China
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22
Q

How is the Lekki Free Trade Zone helping development in SSA?

A

Mass FDI ($76 bill) + free import of Chinese goods to be used in manufacturing will help grow a Nigerian industrial centre to develop economically

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23
Q

How is the Lekki Free Trade Zone hindering development in SSA?

A

Western press argue its neo-colonialism (China taking advantage of Nigeria + getting most profit and political control)

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24
Q

How is the Lekki Free Trade Zone helping China?

A
  • Links to growing African market

- Avoids large tariffs from the EU (‘Made in Nigeria’ stamp)

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25
Q

Is external business trade helping or limiting development in SSA?

A

Both

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26
Q

Give an example of external business trade in SSA?

A

OPEC (in Nigeria + Libya)

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27
Q

What does OPEC stand for?

A

Organisation of Petroleum Exporting Countries

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28
Q

What percentage of crude oil does OPEC produce?

A

40%

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29
Q

How does OPEC positively help development in SSA?

A
  • Brings high income to Nigeria + Libya (particularly when oil prices are high - eg. In early 2010s + 2022)
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30
Q

How does OPEC limited development in SSA?

A
  • National income becomes greatly affected when oil price falls (e.g. late 2010s)
  • SSA countries have little say in OPEC (dominated by Saudi Arabians)
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31
Q

How much intra-regional trade is there in SSA?

A

Very little - only 12% of total SSA trade

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32
Q

Why is there very little intra-regional trade in SSA?

A
  • Conflict within Africa (tribes won’t cooperate)

- No trading bloc was ever made

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33
Q

What impact has intraregional trade had on development in SSA?

A
  • Not having much has LIMITED development (potential to avoid expensive tariffs by creating a trading bloc has not been done)
  • Now trying to increase intra-regional trade to HELP development
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34
Q

Give an example of an intra-regional trading bloc that has seen success

A

ASEAN Free Trade Area

  • Trading bloc agreeing free trade between Asian states (no tariffs)
  • Asia has 4x more intra-regional trade than SSA
  • Has facilitated massive economic growth in Asia
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35
Q

Give an example of a proposal to help intra-regional trade in SSA

A

The TFTA (The Tripartite Free Trade Agreement)

  • Proposal to merge 3 African trading zones into a trading bloc
  • 26 countries plan to join
  • Will allow free trade between countries, removing tariffs so more goods can be traded, boosting development
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36
Q

Define the resource curse

A

Phenomenon whereby countries with lots of natural resources often have worse conditions (less economic growth, democracy, development) than countries with few natural resources

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37
Q

What is the other term for the resource curse

A

‘Paradox of plenty’

38
Q

Why is having an abundance of resources a good thing?

A

In theory this will generate the income required for economic development, through sales of rare resources (e.g. diamonds)

39
Q

Why is having an abundance of resources sometimes a bad thing?

A
  • Country can rely on the sales of these resources (don’t develop other industries + suffer when resource prices fall)
  • Resources can be dead end sectors (e.g. if finite or becoming unpopular)
  • Resources are susceptible to control by elites (funnel resources for themselves, so economic growth isn’t felt by everyone)
  • Resources can encourage armed conflict over who controls them
40
Q

What did Professor Richard America say about the resource curse?

A

‘There is no such thing as a resource curse, there is a management curse’

41
Q

What prevents having resources turning into the resource curse?

A

A stable government with good management skills

42
Q

Why is the resource curse such a big issue in SSA?

A

Stable democratic governments are rare, so resources are often not well managed and open to exploitation

43
Q

What ‘elites’ can exploit resources?

A
  • In country (dictators, gov figures)

- MNCs

44
Q

What are 3 examples of the resource curse in SSA?

A

1) Oil - The Niger Delta
2) Diamonds - Sierra Leone
3) Coltan - DRC

45
Q

Outline the resource curse of oil in the Niger Delta

A
  • Nigeria is in the top 10 oil exporters
  • Oil first discovered in 1958

Resource curse issues:

  • Reliance on oil, neglecting other industries (e.g. agriculture + fishing - fish driven out of the Niger Delta as its been polluted for oil)
  • Exploitation by elites (e.g. 40% of the population live below the poverty line + workers get paid less than $1 per day)
  • Conflict/violence (e.g. most oil-rich areas have lots of drugs, alcohol + violence)
46
Q

Outline the resource curse of diamonds in Sierra Leone

A
  • High value diamonds ($200/carat) as are light + high quality

Resource curse issues:
- Conflict ‘blood diamonds’ (1991-2000 civil war, not directly caused by diamonds but fuelled by them through money for weapons etc 75,000 killed + 50% population displaced)

47
Q

Outline the resource curse of coltan in the DRC

A
  • DRC was under Belgium’s control
  • Holds 65% of world’s coltan

Resource curse issues:
- Conflict (civil war officially ended in early 2000s but violence continues)

48
Q

What is coltan used in?

A

Technology

49
Q

Define MNCs

A

(Multi-National Corporations)

Large companies that operate in several countries

50
Q

Define TNCs

A

Trans-National Corporations

Large companies that operate in 2 countries

51
Q

List some advantages of MNCs

A
  • Employment + new skills for population
  • Money spent in local economy has positive multiplier effect
  • Local infrastructure + social conditions (e.g. education) often improve
  • Higher GDP/GNI
52
Q

List some disadvantages of MNCs

A
  • Local workers often poorly paid + get the lowest jobs.
  • Working conditions often very poor.
  • Economic leakage
  • Often land-grabbing occurs (can displace locals)
  • Often govs use funds to attract MNCs that could have been directly invested in local businesses
53
Q

Define economic leakage

A

Money/economic benefit earned through an MNC is taken from the country it is produced in back to the HQ country

54
Q

Define FDI

A

Foreign Direct Investment

Investment by an individual/company in a company abroad

55
Q

Define outsourcing

A

Company contracted by another company to make some of its goods/services

56
Q

Define offshoring

A

Company having some of its offices/factories overseas (to make use of lower production costs)

57
Q

Give 3 examples of MNCs operating in SSA + whether their effect is mainly positive or negative

A

1) VW - Rwanda - Mainly positive
2) Shell - Nigeria - Mainly negative
3) KFC - Kenya - Mainly negative

58
Q

Outline the MNC VW operating in Rwanda

A
  • HQ in Germany
  • Operates in 4 SSA countries
  • Chose Rwanda: political stability/low corruption, growth rate of 7%, young tech savvy population

ADVANTAGES:

  • Employs 1000 directly
  • Community car-share scheme has increased social mobility (pay to use for limited time)
  • Uber-like scheme has increased social mobility for non-drivers
  • The 2 car-share schemes reduce congestion (less private cars)
  • Began producing electric vehicles in 2019 to reduce pollution

Disadvantages:
- Increasing pollution through car production (estimated to increase petroleum consumption by 10% per yr from 2020 - polluting)

59
Q

Outline the MNC KFC operating in Kenya

A
  • HQ in USA
  • Over 1000 restaurants in Africa (almost 1/4 in Kenya)

Advantages:
- Part of East Africa branch employing 10,000 directly

DISADVANTAGES:

  • Negative impact on health
  • Doesn’t support all local agriculture (potatoes imported from Egypt)
  • Social schemes such as AddHope in SAfrica (provides 150,000 underprivileged healthy meals) but fewer focused on Rwanda
60
Q

Outline the MNC Shell operating in Nigeria

A
  • Produces oil + gas (Nigeria is one of largest suppliers)
  • Has operated there for over 50yrs

Advantages:

  • Employment: 65,000 directly + over 250,000 indirectly (90% Nigerian)
  • Education: builds schools + gives 3000 scholarships per yr
  • Healthcare: over 1 mill Nigerians visit their hospitals per yr
  • Small businesses: invest in micro-credit programmes in the Delta

DISADVANTAGES:

  • Corruption by Shell: $9 bill earned in 2007, locals get almost nothing
  • Corruption in local politics: part of local gov, influencing positions
  • Corruption by militant groups: steal oil available in the Delta
  • Human rights violations: poor conditions + remove those who speak out against them (e.g. Ken Saro-Wiwa)
  • Environmental issues: spills, chemical pollution, soil degradation, toxic fumes, Ogoni Land has sued them multiple times for environmental degradation
61
Q

Why is Shell not held accountable for its actions in Nigeria?

A

It has links to the Nigerian gov

62
Q

Give an example of an area that has sued Shell for environmental degradation in Nigeria

A

Ogoni Land

63
Q

Who is Ken Saro-Wiwa?

A

Activist - spoke out against Shell + was silenced by the Nigerian state

64
Q

Does tourism have a mainly positive or mainly negative impact on development in SSA?

A

Mixed

65
Q

List some advantages of tourism in SSA

A

SOCIO-ECONOMIC:

  • Employment
  • Income can be high, recycled around area in positive multiplier effect
  • Cross-cultural awareness
  • Industry not reliant on resource price fluctuations
  • May invest in infrastructure

ENVIRONMENTAL:
- Ecotourism

66
Q

Define ecotourism

A

Tourism involving responsible travel to natural areas that aims to help conserve the natural environment + improve the well-being of locals

2 main factors: sustainability + conservation

67
Q

At what rate is ecotourism growing worldwide?

A

10-15% per yr

68
Q

List some disadvantages of tourism in SSA

A

SOCIO-ECONOMIC:

  • Economic leakage
  • Employment often low pay + seasonal
  • Inflation of goods to fit tourist incomes can make them too expensive
  • Landgrabbing
  • Industry vulnerable to global shocks + may have a ‘product life cycle’
  • May lose traditional culture

ENVIRONMENTAL:

  • Pollution
  • Land clearing + degradation
69
Q

What does it mean for tourism to have a ‘product life cycle’?

A

Areas eventually lose their interest/appeal - tourism declines

70
Q

What are the 2 tourism case studies I am learning?

A

1) Kenya

2) Rwanda

71
Q

How many tourists visit Kenya? What are they attracted to?

A
  • 2019: over 2 mill (most from US + other African countries)
  • Physical environ: rivers (River Tana), lakes (Lake Turkana), beaches (Mombasa), volcanoes (Kenyan Rift Valley), mountains (Mt Kenya)
  • Wildlife: ‘safari’ animals
72
Q

Kenya is split into 40 game reserves for tourism - give 2 examples

A

1) Tsavo (SE - largest - tents)

2) Masai Mara National Reserve (SW - luxury)

73
Q

List some positive impacts of tourism in Kenya

A
  • High profit earned ($1.6 bill in 2019)
  • Employment (9% of jobs - keeps young people in the area)
  • Some investment in local community (some £ to Masai Mara tribe in exchange for land)
  • Some plans for ecotourism (Kenya’s National Development Plan)
74
Q

List some negative impacts of tourism in Kenya

A
  • Economic leakage (only 2% £ at Masai Mara goes to locals)
  • Jobs poor pay + seasonal
  • Vulnerable to global shocks (dramatic decline after 2008 recession)
  • Conflict between tourists + locals (Mombasa - beach closed)
  • Land grabbing (Masai Mara tribe)
  • Loss of culture (Masai Mara tribe)
  • Deforestation + environ degradation (30-40 minibuses/day to Masai Mara)
75
Q

What is the main goal for Rwanda after its civil war + genocide (1990-94)?

A

Improve economy through ecotourism

76
Q

How many tourists visit Rwanda? Why?

A
  • 2019: 1.6 mill (mainly from UK + US)
  • Physical environ: cleanest SSA air, mountains/volcanoes (Volcanoes National Park), ‘beach’ holidays (Lake Kivu), culturally rich capital Kigali
  • Wildlife: silver-back guerrillas
  • Now one of the safest, most peaceful African countries
77
Q

Outline the use of mountain guerrillas for tourism in Rwanda

A
  • At Volcanoes National Park
  • Biggest ecotourism attraction (over $5mill/yr made)
  • Tourists need $500 permit for 1 hour
  • Environmental criteria are met: e.g. 8 groups of 8, 1 hour viewing per day, teaching about environment, strict code of conduct (no litter etc)
78
Q

List some of the advantages of tourism in Rwanda

A
  • Income (15% of Rwanda’s GDP in 2018 + 5% mountain guerrilla income reinvested into local community)
  • Jobs (nearly 200)
  • Education (10 schools constructed + teach English)
  • Environmental (ecotourism reduces damaging impact of tourists + money reinvested - e.g. GIS mapping to locate poachers in and around the National Park)
79
Q

List some of the disadvantages of tourism in Rwanda

A
  • Tourism still limited by international negative perception of Rwanda (war, genocide, recent media ‘Hotel Rwanda’)
  • Poor accessibility + infrastructure (no direct flights into country from UK or US + hotspots far away on bad roads - e.g. VNP 2hrs from capital - + hotels often low qual not fitting rich audience)
  • Poverty remains (mainly benefits tourist hotspots areas)
80
Q

How does FairTrade work?

A

FairTrade fixes the price of a commodity to ensure the producer is paid fairly

  • Market price rises -> producer paid that price
  • Market price falls -> producer paid ‘FairTrade Minimum Price’
81
Q

Why do consumers have to pay more for FairTrade products?

A

When the market price falls, consumer pays slightly more to make up the ‘FairTrade Minimum Price’ for the producer

82
Q

Define ‘FairTrade Minimum Price’

A

Minimum price that producers will always be paid

83
Q

Define ‘FairTrade Premium’

A

Additional money paid to producers to put in a communal fund that helps their community’s social, economic + environmental conditions

84
Q

What are the 2 parts of FairTrade pay?

A

Pay (market price OR FairTrade Minimum Price) + FairTrade Premium

85
Q

How many farmers use FairTrade?

A

Approx 1.65 mill

86
Q

What must farmers do to be allowed into the FairTrade system?

A

1) Use environmentally-friendly methods

2) Invest some income in local development projects

87
Q

Does FairTrade help or hinder development?

A

When done properly it HELPS

Doesn’t always help the poorest countries - often producers in the richest countries find it easier to meet the criteria (e.g. Costa Rica)

88
Q

Give an example of how FairTrade was implemented in a SSA country

A

Mali (2005-6)

  • Cotton market price fell by 24% to €0.24 /kilo
  • FairTrade Minimum Price (€0.36/kilo) + FairTrade Premium (€0.05/kilo)
89
Q

List some benefits of FairTrade

A
  • Chance for consistent supply of money
  • Emancipation of women (1/4 FairTrade workers)
  • Education (over 2000 ‘FairTrade schools’ that work towards set education goals as a school)
  • Better working conditions (advocates for rights, no child labour)
  • Healthcare (working towards Millennium goals for health)
  • Environment (encourage environmentally-friendly farming, e.g. being more organic with minimal use of expensive chemical fertilisers + pesticides)
90
Q

List some issues with FairTrade

A

Poorest producers often unable to fit the criteria so aren’t helped

Geography - Development In An African Context (2 decks)

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