E+D Economies - Landlocked Countries

Question 1

Constrains because…

Answer 1

• Far more expensive to export/import things
• ^^ increase shipping costs
• ^^^ Kenya have banned Burundi from import/export goods through them, Tanzania has bad roads
• Estimated shipping costs of landlocked countries = 2x shipping costs of coastal countries
• High costs - SRAS shifts left - low real GDP - limited growth
• ^^ higher costs - decrease competitiveness - reduce profit - lower corp tax rev - less government spending - limited development
• Burundi had to borrow $833m from world bank due to high costs and little tax revenue - huge national debt - no funds for development as have to pay back

Question 2

Fix

Answer 2

• Debt relief - when you let someone who has borrowed money of the hook
• Heavily Indebted Poor Countries Initiative - 2009 Burundi $833m debt was relieved
• ^^ no national debt - more money to spend on development - increase growth and development

Question 3

Eval

Answer 3

• May not encourage growth and development
• Many corrupt government officials in Burundi - lots of the extra money the government had after debt relief went to corrupt government officials
• ^^ not enough money for development
• Growth rate has not improved since 2009 - GDP actually went down in 2018

Question 4

Example

Answer 4

• Burundi - 1000km away from coast