Global interdependence (all spec content)

Question 1

What is the difference between a visible and an invisible export?

Answer 1

Visible exports are physically traded goods, invisible exports are services such as tourism and financial services

Question 2

Which country is the top visible trader, and which is the top invisible trader?

Answer 2

• China is the top trader of visible goods
• USA is the top trader of invisible goods/services

Question 3

What is the overall trend in global trade? Which countries are stagnating, which are increasing?)

Answer 3

• USA and Europe are stagnating in their global trade
• Asian markets including China increasing

Question 4

What global share of merchandise does China export?

Answer 4

14.2% of global economy

Question 5

What global share of merchandise does USA import?

Answer 5

12% of global economy

Question 6

What is resource endowment?

Answer 6

Countries endowed with raw materials such as oil in the Middle East

Question 7

What is locational advantage?

Answer 7

Where a country benefits from its proximity to trade routes, oceans or markets for their goods.
Example: Singapore benefits from being on a key trade route between Indian and Pacific oceans, manufacturing in Canada benefits from proximity to massive US market

Question 8

What is foreign direct investment?

Answer 8

Where an external country’s company or government invests in companies in that country. It is essential for economic growth, particularly in MIC as it promotes globalisation and global trade
Example: India recieved 49.35bn$ in the 2022 financial year in FDI

Question 9

Define protectionism

Answer 9

Where a country places policies such as tariffs on certain imports to protect the economy/industry from cheaper imported goods
Example: EU commonm agricultural policy

Question 10

What was the original purpose of the WTO?

Answer 10

• To serve as an arbitator for trade disputes
• Give (in practice) every nation an equal vote in the trade negotiations

Question 11

Positives of the WTO

Answer 11

• Mitigates against uneccesary and unproductive punitive and tit-for-tat protectionism

Question 12

Negatives of the WTO

Answer 12

• In recent years the US has blocked the WTO by blocking appointing replacements for the 6 out of the 7 judges who’s terms expired (2020) making it dysfunctional in resolving trade disputes
• Critics say that it should pay more attention to the needs of poorer countries - especially as wealthier countries still impose tarrifs up to 4x higher for imports from poor countries compared to those from industrialised countries

Question 13

What is fairtrade?

Answer 13

• Fairtrade sets a minimum price for enrolled farmers’ goods and adds a “fairtrade premium” on top, which is used for socially beneficial initiatives such as school bursaries, constructing medical centres improving agriculture (vehicles etc.)
• These are all examples of how the fairtrade premium is being spent in tea farming communities in Kenya

Question 14

How much more do cocoa farmers get by being enrolled in fairtrade?

Answer 14

• An additional 200$ per tonne of produce

Question 15

What do small-scale producers have to do to join fairtrade?

Answer 15

• Join a co-operative with other farmers in the community

Question 16

Negatives of fairtrade

Answer 16

• It may benefit the medium and large scale enterprises more due to the prohibitive £500 joining fee

Question 17

When and why was fairtrade founded?

Answer 17

In the 1960s with Dutch consumers supporting Nicaraguan farmers

Question 18

How many HIC companies and small farmers are currently involved in fairtrade?

Answer 18

• 400 HIC companies
• 500,000 small farmers and their families

Question 19

Define “Debt service ratio”

Answer 19

The ratio of debt service payments to income from exports

Question 20

What are some causes of the international debt crisis?

Answer 20

• Large low-interest loans to poorer countries, especially in the 70s as a result of the Arab-Israli war meant that LICs were encouraged to sell raw materials and grow cash-crops to pay off their debt.
• However, crop surpluses and rising inflation/interest rates in the 80s and 90s meant many LICs debts became increasingly unserviceable

Question 21

How did MICs and LICs begin to address their debt service ratios between 1995 and 2010?

Answer 21

• Increased export earnings
• Debt restructuring and outright relief, especially through the heavily indebted poor countried (HIPC) program

Question 22

How did the debt service ratio of LICs change betweem 1995 and 2010?

Answer 22

• Fell from 17.2% in 1995 to 4.8% as a result of global initiatives

Question 23

What is the HIPCs initiative?

Answer 23

• Identified LICs such as Yemen and DR congo where the debt burden was unmanageable.
• Used money from the IMF to provide debt relief

Question 24

What conditions needed to be met to qualify for HIPCs?

Answer 24

• A track record of macro-economic stability
• Have to compile an interim poverty reduction strategy paper (PRSP)
• To have cleared any outstanding arrears (debt past due date)

Question 25

How much debt relief has the HIPCs initiative organised since 2001?

Answer 25

35bn$

Question 26

How many countries out of the original 39 have still not reached their completion point in the HIPCs initiative?

Answer 26

36/39 - Eritrea, Somalia, Sudan

Question 27

Define “Bilateral aid”

Answer 27

Government aid given directly from one country to another - it is often tied

Question 28

Define “Multilateral aid”

Answer 28

Aid provided by multiple countries and organised by an international body such as the UN

Question 29

Define “tied aid”

Answer 29

Aid that must be spent on products & services provided by companies that are from the country providing the aid

Question 30

Negatives of aid on the receiving country

Answer 30

• Aid often fails to reach the very poorest and when it does benefits are often short-lived
• The use of aid on large, capital-intensive projects can worsen the situation for the poorest people
• Can create a culture of dependency that can be difficult to break
• Encourages the growth of an oversized public sector
• Aid is often wasted on grandiose projects that are not useful to the average citizen

Question 31

Name the stages of Butler’s life-cycle model of a tourist destination

Answer 31

• Discovery
• Growth and development
• Success
• Problem/stagnation
• Decline/rejuvenation

Question 32

Name a few new trends in types of tourism and an example of where they are occuring

Answer 32

• Ecotourism (the galapagos)
• Wine tourism (Rioja valley, Spain)

Question 33

Criticisms of Butler’s life cycle model of tourism

Answer 33

• The main criticism is that it doesn’t apply to all types of tourism, only applying to mass tourism primarily in examples such as Mediterranean beach resorts
• Doesn’t take into account action by the government (limiting numbers, increasing taxes etc.) or a low cost airline adding a cheap route for example

Question 34

How would Ben write a succesful 20 marker on evaluating the life cycle model of tourism?

Answer 34

Argument - For the model to be applicable, a destination has to have experienced the rapid growth and overtourism that characterises Mediterranean beach resorts, and many forms of tourism simply won’t undergo this growth due to their very nature
Point 1: Some types of tourism are popular due to their bespoke, unique, small-group style, wine tourism in Rioja valley wouldn’t be popular if it wasn’t a unique, small scale experience
Point 2: Perfectly described Calafell and Benidorm’s problems due to decreased interest and degradation as a result of overexpansion/overtourism
Point 3: Overlooks potential influence of government action - strict laws around Galapagos tourism/ beach in Thailand closed as overtourism damaging environment

Question 35

What 4 factors are influential in the carrying capacity of a tourist destination?

Answer 35

• Physical (overall impact on the physical environment such as footpath erosion)
• Ecological (number of tourists that can be accomodated without significant impact on flora and fauna)
• Economic (the number of tourists a destination can take without severe adverse economic effects)
• Perceptual (Attitudes of local people to how they view increasing tourist numbers)

Question 36

Define the tourism multiplier effect

Answer 36

• How many times money spent by a tourist circulates through a country’s economy.
• When economic benefits of tourism lead to money generated being circulated through the economy and benefit other areas, such as increased per capita income, tax revenue and infrastructre spending

Question 37

Example of a foreign aid project being poorly executed/useless

Answer 37

• Gyandoot program in Madhya Pradesh, India provided computer terminals to rural areas
• Issues with electricity and poor connectivity meant the project ended up being useless