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Paper 4 Advanced Human Geography Options > Global interdependence > Flashcards

Global interdependence Flashcards

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1
Q

What is resource endowment?

A

Resource endowment is the natural occurrence of resources within a country.

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2
Q

What is trade?

A

Trade refers to the exchange of goods and services for money.

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3
Q

Trade is the most…

A

vital element in the growth of the global economy.

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4
Q

Imports are…

A

Goods and services purchased from other countries are termed imports.

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5
Q

Exports are…

A

goods and services sold to other countries.

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6
Q

Terms of trade is…

A

the price of a country’ exports relative to the price of its imports, and that changes that take place over time.

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7
Q

What is comparative advantage?

A

Comparative advantage is the idea that different countries specialise in producing those goods and services for which it is best endowed, and then trade a proportion of these goods and services to obtain the goods and services that each country needs

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8
Q

What is trade dependency?

A

Trade dependency is when an LICs is so reliant trading partner/s that any changes in their economic policy or economic condition could have a severe effect on the LIC’s economy.

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9
Q

Primary-product dependent means…

A

a country relies on one or a small number of primary products for the bulk of its export earnings.

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10
Q

What is protectionism?

A

Protectionism is the institution of policies (tariffs, quotas, regulations) that protect a country’s industries against competition from cheap imports.

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11
Q

What is free trade?

A

Free trade describes a hypothetical situation whereby producers have free and unhindered access to markets everywhere.

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12
Q

What is GDP?

A

GDP is the total value of a nation’s (both residents and non residents) finished domes goods and services during one year/

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13
Q

What is Gross National product?

A

Gross National product is a measure of the value of all goods and services produced by country’s residents and businesses. It estimates the value of the final products and services manufactures by a country’s residents, regardless of production location.

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14
Q

What is fairtrade?

A

Fairtrade is a movement that aims to create direct long-term trading links with producers in LICs, and to ensure that they receive a guaranteed price for their product, on favourable financial terms.

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15
Q

GDP and GNP are…

A

the most commonly used measures of a country’s economy, both of which represent the total market of all goods and services produced over a defined period.

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16
Q

What are some general facts about invisible trade?

A

-North America and Europe are net exporters of invisible trade. The other areas are net importers.

-Royalties and license fees = 18% of North America’s commercial service exports.

-In Europe it was 6%.

-Middle East = 8.8% = Computer and Information services.

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17
Q

Why are North America and Europe are net exporters of invisible trade?

A

North America and Europe have a skilled and educated workforce.

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18
Q

Trades results from…

A

the uneven distribution of the earth’s resources.

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19
Q

What is natural resource endowment?

A

Developed countries endowed with natural resources were able to grow by diversifying their economies using proceeds from their natural resources.

Resource endowment offers greater opportunities for achieving high levels of growth and development if properly managed.

(Oil in Saudi Arabia, wheat in Ukraine).

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20
Q

What is an issue of primary product dependency?

A

Relying on one product risk economic collapse. Economic collapse is reduced through an economy spreading activities over multiple sectors.

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21
Q

What are some examples of resource endowment?

A

Middle East dominates oil production, therefore this plays a significant role in their balance.

Food production is a considerable reliance export in several countries (Canada, Ukraine, New Zealand). However, this is vulnerable to climatic factor which can heavily influence yield.

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22
Q

What is Foreign Direct Investment (FDI)

A

Foreign Direct investment is the financial capital flow from one country to another for the purpose of constructing physical capital i.e. building a factory in another country.

An example would be McDonald’s investing in an Asian country to increase the number of stores in the region. Here, a business enters a foreign economy to strengthen a part of its supply chain without changing its business in any way.

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23
Q

Investment in a country…

A

is the key to its increasing its trade.

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24
Q

What was predicted about the BRICs and why?

A

It was predicted that BRIC countries in 2001 were set to dominate the global economy by 2050. This is because they had significant markets to consume and populations to produce manufactured goods, services and raw materials.

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25
Q

What are some general facts about BRICs?

A

In 2020, the Global GDP of these countries totalled $20 trillion.

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26
Q

Explain problem of countries that have not yet be integrated into globalisation?

A

Hundreds of millions of people live in countries that have become less globalised (in an economic sense) as trade as fallen in relation to national income. Globalisation has impacts minimally on these countries. These countries are LDDC economic instability, political instability and climate poverty.

This has lead to LIC businesses operating in investment climates that undermine their incentive to invest in growth. This in turn deters investment.

For example, economic instability makes investment for TNCs risky.

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27
Q

How are global markets changing?

A

The West domination of trade is decreasing as globalisation increases. This has allowed NICs to grow their economies as they develop better education and have utilized their large population to produce good/services.
(DRC)

(research this)

28
Q

What are historical relationships based upon?

A

Historical relationships often based on colonial which remans an important factor for global trade patterns.

Economies were linked to Franc. This was called the Franc fique.

29
Q

How did the colonial expansion influence trade?

A

Colonial expansion brough a trading relationship dictated to by the European countries for their own benefit. The colonies played a subordinate role which brough them only very limited benefits at the expense of distortion of their economies.

The flow of goods was of primary goods from the colony and was deemed to be exploitative.

Between 1945 and 1970 significant numbers of colonies gained independence and attempted to change their terms of trade.

The legacy of trade dependency is one of the reasons why poorer tropical countries have such a limited share of world according to development economists.

30
Q

What is political isolation?

A

A policy or doctrine of trying to isolate one’s country from the affairs of other nations by declining to enter into alliances, foreign economic commitments, international agreements, and generally attempting to make one’s economy entirely self-reliant; seeking to devote the entire efforts of one’s country to its own.

North Korea is politically isolated.

31
Q

What is international isolation the result of?

A

International isolation is often the result of international sanctions against a specific country, but is may also be a result of a policy isolationism put in place by the country.

32
Q

What are the economic impacts of political isolation?

A

Your exports are limited as you do not have a buying market. This leads to stockpiling and perishable goods will go to waste. In parallel, you are restricted in your imports as you don no have a selling market. So, the source of your goods is very limited and the price of these goods will be much higher.

33
Q

What is an example of political isolation?

A

Libya under Muammar Gaddafi, for example, ended up in a state of international isolation after decades of confrontation with the West and its critical politics against fellow Arab governments.
People are restricted, foreign banking assets in sea (e.g. Russian assets in London).

34
Q

Nearly all of NICs were…

A

colonies. This meant they had an imbalance of trade with colonists.

35
Q

What are NICs?

A

NICs are countries who economies have not yet reached a developed country’s status but have, in a economic sense, outpaced their developing countries.

They are not HICs or MICs.

Such countries are still considered developing nations and only differ from other developing nations in the rate at which an NICs growth is much higher over a shorter allotted time period compared to other nations
This is usually export orientated.

India was an LICs, and it now an NIC.

36
Q

How do governments change with NICs?

A

There is further development in government structures, such as democracy, the rule of law, and less corruption.

37
Q

How does the standard of living change with NICs?

A

Better lifestyle people living in such countries an experience are better transportation, electricity, and access to water, compared to other developing countries.

38
Q

What are tiger economies?

A

A tiger economy is a term commonly used to describe several booming economies in Southeast Asia. The Asian tiger economies typically include Singapore, Hong Kong, South Korea, and Taiwan. The economic growth in each of the Asian tiger nations is usually export-led but with sophisticated financial and trading hubs.

39
Q

What are criticisms of NICs?

(compared to LICs)

A

-NICs usually benefit from comparatively lower wage costs, which translates into lower input process. As a result, is often easier for producers in NICs to outperform and outproduce factories in developed countries, where the cost of living is higher, and trade unions and other organization have more political sway. This comparative advantage is often criticized by advocates of the fair trade movement.

40
Q

What are criticisms of NICs?

(human rights)

(bureaucratic)

A

Critics of NICs argue economic freedom is not always is associated with political freedom in countries such as China, pointing out that internet censorship and human rights violations are common.

This case is diametrically opposite for India; while being a liberal democracy throughout after its independence, India has been widely criticized for its inefficient, bureaucratic governance and slow process of structural reform. Thus, while political freedom in China remains limited, the average China enjoys a much a higher standard of living than NICs such as India.

41
Q

What is primary product dependence?

A

Primary product dependence is when countries rely on one or small number of primary products for the bulk of their export earnings.

Ireland and the potato famine in the 1900s.

Thailand, Greece dependent on tourism.

42
Q

What it trade dependency?

A

Trade dependency is when a developing country is so reliant on its advanced trading partner(s) that any changes in their economic policy or economic policy or economic conditions could have a severe effect on the developing country’s.

43
Q

What is terms of trade?

A

refers to the price of country’s exports relative to price of its imports, and the changes take place over time.

44
Q

What is fair trade?

A

Is a movement that aims to create direct long-term trading links with producers in developing countries, and to ensure that they receive a guaranteed price for their product, on favorable financial terms.

45
Q

What is free trade?

A

A hypothetical situation whereby producers have free and unhindered access to markets everywhere. While trade freer today than in the past, governments still impose significant barriers to trade and often subsidise their own.

Japan import duties, car industry.

46
Q

What is protectionisms?

A

Is the institution of policies (tariffs, quotas, regulations) that protect a country’s industries against competition from cheap imports.

47
Q

What is MERCOSUR?

A

The Southern Common Market, is an economic and political bloc originally comprising Argentina, Brazil, Paraguay, and Uruguay.

48
Q

What is a trade bloc?

A

Trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where barriers to trade (tariffs and others) are reduced or eliminated among the participating states.

49
Q

What is a free trade area?

A

A free trade area is a grouping of countries within which tariffs and non-tariff trade barriers between the members are generally but with no common trade policy towards non-members.

It is the region encompassing a trade bloc whose member countries have signed a free trade agreement.

It is trade without taxes, sometimes an import quota is imposed which is a limit on the quantity of a commodity or a service that be produced abroad or sold domestically.

50
Q

What do quotas and subsidies do?

(free trade)

A

Quotas raise the domestic price above the world price so domestic sellers are better off but remember that domestic consumers are worse off as it is license holders who promise from selling at the world price.

Subsidizing domestic producers can also restrict imports.

51
Q

What is the role of WTO?

A

The WTO is a body designed to promote free trade through organizing trade negotiations and act as an independent arbiter in settling trade disputes. To some extent the WTO has been successful in promoting greater free trade.

52
Q

What are the criticisms of the WTO?

A

Free trade benefits developed countries more than developing countries. It is argued, developing countries need some protection to be able to develop new industries; this is important to be able to diversify the economy. It is known as the infant industry argument.

Economist Ha Joon Chang WTO trade rules are like “pulling the ladder away they used themselves to climb up.”

53
Q

What are the core principles of the WTO.

A

The core principles of the of WTO rules - countries should trade without discrimination. It means a local firms is not allowed to favour contractors. It is argued this gives an unfair advantage to multinational companies and can have costs for local firms and the right of developing countries to favour their own emerging industries.

54
Q

What are the environmental issues of free trade?

A

Free trade has often ignored environmental considerations. Free trade has enabled imports to made from countries with the least environmental protection. Many critics the WTO’s most important objective of maximizing. In an ear of climate change, increase GDP may be the least important. Therefore, the WTO should do more to protect the environment.

55
Q

How has free trade been beneficial?

A

Free trade and growth of exports has been an important factor in raising living standards, especially in south-east Asia, which has benefited from the remarkable growth of world trade.

The growth of world trade has helped reduce absolute poverty.

56
Q

What is external debt?

A

Total debt in a country owed to creditors outside the country. The debtors can be the government, corporations or private households. The debt included money owed to commercial banks, other governments or international financial institutions such as the World Bank.

57
Q

What is debt service ratio?

A

The proportion of a countries export earnings that it needs to use to meet its debt repayments (some countries set aside 20-30% of export earnings to meet this).

A significant number of countries have a DSR of 10-20%. This would be significant for HICs but this cripples LICs. An ever-increasing proportion of new debt is used to service interest payments on old debts. The debt service ratio is very high in poor countries.

58
Q

What is unpayable debt?

A

When the interest on the debt is beyond the means of a country thus preventing the debt ever being repaid.

Many poor countries are paying back large amounts in debt repayments while at the same struggling to provide basic services for their populations. This leads to poor creditworthiness.

59
Q

How has debt affected LICs?

A

LICs took out huge loans (for Millions of pounds) during the 1970s, offered to them by banks and governments in rich MICs.

The LICs wanted the money to use the money for various development such as building dams, roads, and school etc.

The longer the loan went unpaid the larger it got, because MICs added a sum of money caused interest every month.

Over time, these loans grew so larg that some LICs would never be able to pay them of. In parallel, some LICs spent more on repaying loans than on healthcare and ecuation.

This has had a damaging effect on the quality of live of people who live in these areas.

60
Q

What has the debt burden on LICs been reduced?

(example of debt relief)

A

In the new millennium, a campaign was started to drop the debt, which has had some success in cancelling some debt, freezing the interest on some debt and in some cases giving poor LICs more time to pay back their debts. This campaign was called Jubilee.

61
Q

How has U2 singer Bono helped with debt relief?

A

Drop the Debt is the slogan of the late 1990s campaign for international debt cancellation led by the organisation Jubilee 2000.

62
Q

Origins of the debt crisis.

A

Arab Israeli War (1973-4)

Oil prices increases (lack of oil supply).

Profits from these Govt/Individual banks of MICs attempted to offer low interest loan to LICs.

These LICs were encouraged to exploit their national resource and cash crops in order to pay back loans with profits from exports.

Recessions in the 1980s/1990s led to rising inflation/interest rates at the same time surpluses exacerbated the situation.

This result in exports declining and LICs unable to pay interest on their debts.

63
Q
A

Loans can create an upward spiral of development. However, dubious loans were given with high rates of interest. Many developmental economist felt that the legacy of colonialism arguing that the colonial powers left legacy of dependency and unfair levels of debt.

64
Q

What is multilateral debt?

A

The portion of a country’s external debt burden owed to international financial institutions (IFIs) such as the International Monetary Fund (IMF) and the World Bank. Significant growth of multilateral debt began with the Latin American debt crisis of the early 1980s. Latin American countries were susceptible to corruption/dictators, such as Venezuela.

65
Q

What is the role of the World Bank?

A

The World Bank has the role of lending money and giving grants to the developing world to fund economic development and reduce poverty.

The World Bank requires recipients to adopt trade liberalisation policies and to open up to FDI by removing legal restrictions and capital controls. It also requires them to adopt structural adjustment programmes to reduce govt budget deficits.

65
Q

What is the MDRI?

(attempts to reduce debt).

A

The MDRI was adopted by the IMF in the late 2005. This initiative puts into action a debt relief proposal initially advanced by the G-8 in June 2005, which called for cancellation of 100% of the claims of three multilateral institutions - the IMF, IDA, AfDf.

66
Q

The World Bank requires recipients to adopt trade liberalisation policies and to open up to FDI by removing legal restrictions and capital controls. It also requires them to adopt structural adjustment programmes to reduce govt budget deficits.

With this my mind, who may developing countries prefer to borrow from?

What are the ads and disads of this?

A

Developing countries may therefore prefer to borrow from China, or the Chinese-led Asian infrastructure investment Bank, which doesn’t impose such donations. In 2010, China loamed $110 billion - more than the World Bank. Often involves govt. spending cuts, privatisation of state owned frms and opening up to foreign competition.

Has helped developing countries develop deeper ties to the global economy but has been criticised for having policies hat put economic development before social development.

Paper 4 Advanced Human Geography Options (5 decks)

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