3.3.10 - Influence Of Economic Factors On The Development Of Two Or More Countries Flashcards
1
Q
Define free trade
A
Goods + services can be bought/sold between countries without tariffs, quotas or other restrictions
2
Q
Define trade blocs
A
Groups of countries that manage + promote free trade between each other
3
Q
What are the 3 aspects of trade we look at?
A
1) Protectionism + subsidies
2) Tariffs
3) Quotas
4
Q
Define protectionism
A
Policies that shield a country’s domestic industries from foreign competition by: taxing imports + using subsidies
5
Q
What are the 2 main methods of protectionism?
A
1) Taxing imports
2) Giving subsidies to internal companies (making them more competitive)
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
7
Q
If SSA can’t afford protectionism, how does protectionism impact its development?
A
The countries + trading blocs it trades with use protectionism
8
Q
Give an example of protectionism limiting development in SSA
A
EU cows
- Subsidised $2.60/day
- Hard for SSA sales to compete
9
Q
Define tariffs
A
Tax imposed on imports
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
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
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
13
Q
Define quotas
A
Limits placed on volume of goods imported
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
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
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
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)
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
19
Q
Who is most of SSA’s external country trade with? Most imports + exports are to/from this country
A
China
20
Q
Give an example of external country trade in SSA
A
China-Nigeria Free Trade Zone (Lekki Free Trade Zone)
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
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
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)
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)
25
Is external business trade helping or limiting development in SSA?
Both
26
Give an example of external business trade in SSA?
OPEC (in Nigeria + Libya)
27
What does OPEC stand for?
Organisation of Petroleum Exporting Countries
28
What percentage of crude oil does OPEC produce?
40%
29
How does OPEC positively help development in SSA?
- Brings high income to Nigeria + Libya (particularly when oil prices are high - eg. In early 2010s + 2022)
30
How does OPEC limited development in SSA?
- National income becomes greatly affected when oil price falls (e.g. late 2010s)
- SSA countries have little say in OPEC (dominated by Saudi Arabians)
31
How much intra-regional trade is there in SSA?
Very little - only 12% of total SSA trade
32
Why is there very little intra-regional trade in SSA?
- Conflict within Africa (tribes won’t cooperate)
| - No trading bloc was ever made
33
What impact has intraregional trade had on development in SSA?
- 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
34
Give an example of an intra-regional trading bloc that has seen success
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
35
Give an example of a proposal to help intra-regional trade in SSA
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
36
Define the resource curse
Phenomenon whereby countries with lots of natural resources often have worse conditions (less economic growth, democracy, development) than countries with few natural resources
37
What is the other term for the resource curse
‘Paradox of plenty’
38
Why is having an abundance of resources a good thing?
In theory this will generate the income required for economic development, through sales of rare resources (e.g. diamonds)
39
Why is having an abundance of resources sometimes a bad thing?
- 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
What did Professor Richard America say about the resource curse?
‘There is no such thing as a resource curse, there is a management curse’
41
What prevents having resources turning into the resource curse?
A stable government with good management skills
42
Why is the resource curse such a big issue in SSA?
Stable democratic governments are rare, so resources are often not well managed and open to exploitation
43
What ‘elites’ can exploit resources?
- In country (dictators, gov figures)
| - MNCs
44
What are 3 examples of the resource curse in SSA?
1) Oil - The Niger Delta
2) Diamonds - Sierra Leone
3) Coltan - DRC
45
Outline the resource curse of oil in the Niger Delta
- 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
Outline the resource curse of diamonds in Sierra Leone
- 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
Outline the resource curse of coltan in the DRC
- 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
What is coltan used in?
Technology
49
Define MNCs
(Multi-National Corporations)
Large companies that operate in several countries
50
Define TNCs
Trans-National Corporations
Large companies that operate in 2 countries
51
List some advantages of MNCs
- 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
List some disadvantages of MNCs
- 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
Define economic leakage
Money/economic benefit earned through an MNC is taken from the country it is produced in back to the HQ country
54
Define FDI
Foreign Direct Investment
Investment by an individual/company in a company abroad
55
Define outsourcing
Company contracted by another company to make some of its goods/services
56
Define offshoring
Company having some of its offices/factories overseas (to make use of lower production costs)
57
Give 3 examples of MNCs operating in SSA + whether their effect is mainly positive or negative
1) VW - Rwanda - Mainly positive
2) Shell - Nigeria - Mainly negative
3) KFC - Kenya - Mainly negative
58
Outline the MNC VW operating in Rwanda
- 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
Outline the MNC KFC operating in Kenya
- 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
Outline the MNC Shell operating in Nigeria
- 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
Why is Shell not held accountable for its actions in Nigeria?
It has links to the Nigerian gov
62
Give an example of an area that has sued Shell for environmental degradation in Nigeria
Ogoni Land
63
Who is Ken Saro-Wiwa?
Activist - spoke out against Shell + was silenced by the Nigerian state
64
Does tourism have a mainly positive or mainly negative impact on development in SSA?
Mixed
65
List some advantages of tourism in SSA
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
Define ecotourism
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
At what rate is ecotourism growing worldwide?
10-15% per yr
68
List some disadvantages of tourism in SSA
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
What does it mean for tourism to have a ‘product life cycle’?
Areas eventually lose their interest/appeal - tourism declines
70
What are the 2 tourism case studies I am learning?
1) Kenya
| 2) Rwanda
71
How many tourists visit Kenya? What are they attracted to?
- 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
Kenya is split into 40 game reserves for tourism - give 2 examples
1) Tsavo (SE - largest - tents)
| 2) Masai Mara National Reserve (SW - luxury)
73
List some positive impacts of tourism in Kenya
- 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
List some negative impacts of tourism in Kenya
- 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
What is the main goal for Rwanda after its civil war + genocide (1990-94)?
Improve economy through ecotourism
76
How many tourists visit Rwanda? Why?
- 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
Outline the use of mountain guerrillas for tourism in Rwanda
- 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
List some of the advantages of tourism in Rwanda
- 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
List some of the disadvantages of tourism in Rwanda
- 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
How does FairTrade work?
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
Why do consumers have to pay more for FairTrade products?
When the market price falls, consumer pays slightly more to make up the ‘FairTrade Minimum Price’ for the producer
82
Define ‘FairTrade Minimum Price’
Minimum price that producers will always be paid
83
Define ‘FairTrade Premium’
Additional money paid to producers to put in a communal fund that helps their community’s social, economic + environmental conditions
84
What are the 2 parts of FairTrade pay?
Pay (market price OR FairTrade Minimum Price) + FairTrade Premium
85
How many farmers use FairTrade?
Approx 1.65 mill
86
What must farmers do to be allowed into the FairTrade system?
1) Use environmentally-friendly methods
| 2) Invest some income in local development projects
87
Does FairTrade help or hinder development?
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
Give an example of how FairTrade was implemented in a SSA country
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
List some benefits of FairTrade
- 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
List some issues with FairTrade
Poorest producers often unable to fit the criteria so aren’t helped
